INFOGRAPHIC: India’s fossil fuel burn to surge as searing heat waves ratchet peak power demand

Saif Humaid al Falasi joined the Emirates National Oil Co. Group as general manager in 2008 after 25 years with the Abu Dhabi National Oil Co. He became ENOC Group CEO in March 2015. He also serves as a member of several entities developing the UAE's energy policies, including the Dubai Supreme Council of Energy, the Fuel Price Committee in Abu Dhabi and the Dubai Future Council of Energy. Under Falasi's leadership, ENOC Group grew its refinery capacity by 50% to 213,000 b/d through an expansion project worth over $1 billion completed in 2019. The expanded Jebel Ali facility produces LPG, gasoline blendstock, jet fuel, diesel and fuel oil that meet Euro 5 specifications. ENOC currently supplies jet fuel to more than 200 airports across 22 countries. It operates 185 service stations in the UAE and more than 20 in Saudi Arabia. It also has a storage capacity of 6.68 million cu m to hold petroleum, chemicals and natural gas in the UAE, Morocco, Saudi Arabia, Singapore and Djibouti. Falasi spoke to S&P Global Commodity Insights Editorial Lead Claudia Carpenter about several projects that are underway as he steers ENOC to help the UAE reach net zero by 2050. What are some of the key projects ENOC is working on to help the UAE achieve its 2050 net-zero target? Saif Humaid al Falasi Most recently, ENOC signed a memorandum of understanding with DEWA (Dubai Electricity and Water Authority) to develop and operate a joint integrated pilot project for the use of hydrogen in mobility. Green hydrogen is an environmentally friendly energy source, which represents one of the pillars of a sustainable future. We also participated in an Emirates flight demonstration powered by 100% sustainable aviation fuel (SAF) by securing, blending and loading it. Furthermore, we invested significantly in the Service Station of the Future, which incorporates multiple sources of energy and harnesses the power of renewables. Inspired by the ghaf tree, a carbon fiber canopy running on wind energy and sporting the deployment of various smart technologies, the first-of-its-kind in the world service station — which is now open to the public at Expo City Dubai — symbolizes the strength of innovation and indicates how sustainability and technology are intrinsic to the future of energy and a greener world. The group has also prioritized sustainability within its own operations. In 2022 alone, ENOC Group achieved Dirham 8.6 million ($2.34 million) in savings from energy and resource management (E&RM) projects. The group's E&RM projects include solar photovoltaic panel implementation across its retail sites and various operations, in addition to LED retrofits, and the utilization of innovative sustainable solutions such as evaporative cooling, vapor and heat recovery systems. ENOC Group has also banned single-use plastics across its operations as well as in its head office. What is next after the Emirates flight demonstration using SAF in January? We participated in this achievement by securing and blending SAF, which will help to secure this type of fuel in the UAE and the rest of the world in the future. Investment in SAF in the years ahead will be key to supporting the global aviation industry to meet its energy transition goals. The use of SAF can result in up to an 80% reduction in the life cycle of carbon dioxide emissions and is widely considered in the global aviation industry as the most significant contributor to reaching its net-zero goal by 2050. What is the status of the jet fuel pipeline to Dubai's Al Maktoum International Airport? In 2022, we completed the construction of a 16.2 km jet fuel pipeline linking the Horizon Emirates Jebel Ali Petroleum storage terminal in Jebel Ali to Al Maktoum International Airport. The pipeline, which was safely and successfully commissioned in July 2022, will carry 2,000 cu m/hour of jet fuel to Al Maktoum and will meet the demand for jet fuel at Dubai airports up until 2050. Do you expect ENOC to be a part of Dubai's plans to sell shares in some government holdings? At the moment we are not exploring any potential initial public offering but are open to the idea of exploring it in the future. Has ENOC had to change the way it does business because of the energy transition? Over the years, ENOC Group has supported the UAE's strategy to diversify its energy mix by combining renewable and clean energy sources that are visible across numerous service stations that are powered by solar energy today. What is your outlook on fuel demand considering the growth in electric cars? In the short term, the impact on fuel demand may be relatively small, as electric cars still represent a small portion of the overall vehicle market. However, as electric cars become more affordable and more widely available, their market share is expected to increase, leading to a considerable decline in demand for gasoline and diesel. This does not come as a surprise as we are witnessing a global shift from traditional fossil fuel-based energy sources such as coal, oil and gas toward cleaner and more sustainable energy sources. These changes are expected to create significant opportunities for businesses and investors, as well as promote greater energy security and help to reduce energy poverty in developing countries. The energy transition is not without challenges. However, it presents significant opportunities for energy providers, such as ENOC, to diversify their portfolios, innovate and collaborate with other stakeholders to create a more sustainable energy future. This interview was first published in the May 2023 edition of Commodity Insights Magazine . Click here to download the magazine.

In this week’s Market Movers Americas, presented by Katharine de Senne: • Pipeline maintenance to weigh on Permian Basin gas prices • Seasonal maintenance may limit upside to LNG feedgas demand • Western power operators' imbalance markets add members • Steel scrap price in focus for buy week

The absence of Freeport LNG exports from June 2022 to February 2023 was a major event in the history of US natural gas exports that demonstrated the growing connection between US supply and global gas markets. Click here for the full-sized infographic Related content: Freeport LNG outage showed growing connection of US supply, global gas market

The Freeport LNG terminal in Texas started exporting LNG cargoes in mid-February for the first time since a fire and explosion in June 2022 forced a shutdown of the facility, marking a milestone in the history of US LNG. In the global LNG market, the Freeport outage initially exacerbated supply shortages that sent sky-high spot prices even higher. In the US, the shutdown took the lid off a really hot domestic gas market, as a key source of domestic demand went offline. But global LNG and US gas market dynamics have changed dramatically in the eight months since Freeport went offline. In this episode, S&P Global Commodity Insights LNG experts Harry Weber and Corey Paul discuss these issues as Freeport returns, as well as LNG market fundamentals more broadly in the Atlantic. Also listen: Have LNG and gas markets returned to normality in 2023? Register for CERAWeek by S&P Global here More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Platts, part of S&P Global Commodity Insights, has launched new LNG assessments, including one for the spread between European TTF and LNG prices, effective Feb. 15, 2023. This follows the increased market interest to understand the prevailing price difference between LNG and European gas prices in Eur/MWh recent legislative announcements in the European Union. The new assessments include: The price of front-month JKM (AAOVQ00) in Eur/MWh. The price difference between month-ahead Dutch TTF (GTFTM01) and the average of Platts DES NWE (LNNTA00), Platts DES MED (LNMTA00) and Platts JKM in Eur/MWh. A rolling three-day average of the aforementioned spread between Dutch TTF and global LNG. The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent month of NWE assessments. For example, from the 1st to the 15th of the calendar month, this would consider Platts NWE (AASXU00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts NWE (H2 [LNNDA00] + H3 [AASXV00] / 2) minus Platts Dutch TTF M1 (GTFWM10). The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent time month of Platts MED LNG assessments. For example, from the 1st to the 15th of the calendar month, this would look at Platts MED (AASXY00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts MED (H2 [LNMDA00] + H3 [AASXZ00] / 2) minus Platts Dutch TTF M1 (GTFWM10). Platts decided to launch the assessments on Jan. 17 in a subscriber note available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/011723-platts-to-launch-european-lng-natural-gas-differential-assessments , following a proposal on Dec. 20, in a subscriber note available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/122022-platts-proposes-european-lng-natural-gas-differential-assessments . Full details of the existing Platts DES NWE LNG assessments can be found in the Global LNG Specifications Guide: https://www.spglobal.com/commodityinsights/PlattsContent/_assets/_files/en/our-methodology/methodology-specifications/global_lng.pdf . Please send all feedback, comments and questions to lngeditorialteam@spglobal.com and pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

LNG is seeing a competitive boost as a US bunker fuel, as FOB prices have dropped sharply from record highs and spot marine fuel has trended higher. Shipowners are increasingly evaluating shifting economics and environmental considerations. Some market participants see the ability to offer a Henry Hub-linked price as a unique advantage for LNG producers in the US, whether for small-scale or large-scale exports or for use as a bunker fuel. LNG bunker prices in Europe also are seeing additional attention. In recent months, an Italian strategy group was heard to have met with market participants trying to get intelligence about LNG bunkering opportunities in the Mediterranean; they were said to be scouting locations around Poland and Turkey. "The world has been shifting to alternative fuels," said an Atlantic-based LNG trader. "We may see a switch to gas if it keeps coming down." US SE Coast LNG bunkers were assessed at $15.174/MMBtu Jan. 18, or 115% Henry Hub plus $11.25/MMBtu for volumes of 3,000-5,000 cu m. That was slightly cheaper than the latest bulk 0.5%S marine fuel barge value at 1630 London time, which was $15.249/MMBtu, or $589.25/mt. On an equivalent basis, at the same time, USGC HSFO, with the highest sulfur content of the three fuels, was the least expensive, at $9.616/MMBtu. The Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed at $15.35/MMBtu Jan. 18, down nearly 80% from the record-high $73.35/MMBtu Aug. 26, 2022. LNG supplies have flooded the Atlantic in recent months, amid Europe's efforts to build gas inventories while at the same time reducing its reliance on Russian supplies. Europe entered the winter with gas storage more than 90% full. Relatively mild weather since then has kept gas stocks high. Meanwhile, spot marine fuel bunkers pricing has generally trended higher for US Gulf Coast ports in 2023, with assessments tracking recent rebounds for crude futures. Additionally, markets are seeing tight supply and logistical challenges related to fog, further propping up values in recent days. Bulk 0.5%S marine fuel barge value has risen from a Dec. 30 assessment of $567.25/mt, with some sentiment pointing to strong demand from the retail bunkers segment in the US Gulf Coast. On that front, Houston spot 0.5%S bunkers pricing has risen from $580/mt ex-wharf Dec. 30 to its most recent assessment of $618/mt ex-wharf Jan. 17. The New Orleans market, which competes with Houston for retail bunker stems, has seen retail 0.5%S bunkers value jump from $570/mt to end 2022 to its most recent close at $690/mt ex-wharf—a three-month high. "No barrels, resupply uncertain," a source said recently of New Orleans' rising prices. "Suppliers are struggling to find resupply barrels." The situation has seen each of the key USGC ports prop up the other at times on retail values, as ships will generally consider both for refueling operations despite Houston typically carrying a discount to New Orleans. "There are no avails, or won't be soon," a second source said of Houston. "Product is tight, and resupply has gone up in price considerably." That retail spread has been inverted at times in January, but more recently tight supply had led to New Orleans seeing its premium widen over Houston.

Platts, part of S&P Global Commodity Insights, will launch new LNG assessments, including one for the spread between European TTF and LNG prices, with effect from Feb. 15, 2023. This follows the increased market interest in understanding the prevailing price difference between LNG and European gas prices in Eur/MWh after recent legislative announcements in the European Union. The new assessments will include: The price of front-month Platts JKM (AAOVQ00) in Eur/MWh. The price difference between month-ahead Dutch TTF (GTFTM01) and the average of Platts DES NWE (LNNTA00), Platts DES MED (LNMTA00) and Platts JKM in Eur/MWh. A rolling three-day average of the aforementioned spread between Dutch TTF and global LNG. The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent month of NWE assessments. For example, from the 1st to the 15th of the calendar month, this would consider Platts NWE (AASXU00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts NWE (H2 [LNNDA00] + H3 [AASXV00] / 2) minus Platts Dutch TTF M1 (GTFWM10). The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent time month of Platts MED LNG assessments. For example, from the 1st to the 15th of the calendar month, this would look at Platts MED (AASXY00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts MED (H2 [LNMDA00] + H3 [AASXZ00] / 2) minus Platts Dutch TTF M1 (GTFWM10). This decision follows a proposal note published Dec. 20, 2022, available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/122022-platts-proposes-european-lng-natural-gas-differential-assessments Full details of the existing Platts DES NWE LNG assessments can be found in the Global LNG Specifications Guide: https://www.spglobal.com/commodityinsights/PlattsContent/_assets/_files/en/our-methodology/methodology-specifications/global_lng.pdf. Please send all feedback, comments and questions to lngeditorialteam@spglobal.com and pricegroup@spglobal.com by February 15, 2023. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

In this week's Market Movers Europe with Nikolaos Aidinis – Antonopoulos: Demand worries dominate in oil Germany begins commissioning tests at LNG terminals Mild, windy weather subdues energy prices Carbon auctions set to resume

Germany is poised to begin commissioning work at its first floating LNG import terminal in a matter of days, enabling the EU powerhouse to receive direct LNG imports for the first time. Germany has long held the ambition to install LNG terminals on its northern coast, but Russia's invasion of Ukraine and subsequent cuts in pipeline deliveries lent new momentum to German efforts to diversify supply through LNG. In all, six import projects are under development -- five backed by the German state and one privately-funded terminal. The first to start up will be Uniper's state-backed FSRU at Wilhelmshaven -- the Hoegh Esperanza -- which arrived in port on Dec. 15. "The first gas will flow on Dec. 22," a Uniper spokesperson told S&P Global Commodity Insights. During the commissioning phase, gas send-outs of between 15 GWh/d and 155 GWh/d into the Open Grid Europe network are expected. "Commercial operation of the FSRU is currently planned to commence mid-January with an expected maximum capacity of roughly 155 GWh/d," Uniper said in a market transparency note. That is the equivalent of some 15 million cu m/d of gas flow, which on an annualized basis would mean total supply of some 5.5 Bcm/year. That is a far cry from the 158 million cu m/d regularly supplied to Germany from Russia via the now damaged and idled Nord Stream pipeline system before June this year. The loss of Russian gas has hit Germany hard, with record high prices putting significant pressure on German buyers of Russian gas forced to procure substitute gas on the open market. Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26. Prices have weakened since on the back of healthy storage and demand curtailments, though prices remain historically high with Platts assessing the TTF month-ahead price Dec. 16 at Eur118.23/MWh. Nonetheless, managing the deployment of an FSRU within such a short period of time is impressive, with construction work at Wilhelmshaven only having started in May after the project was revived in February. The Hoegh Esperanza could also have an expanded capacity in the future, with Uniper having flagged a potential send-out capacity of 7.5 Bcm/year. Other startups As well as the FSRU at Wilhelmshaven, two other projects are due to begin operations shortly. Private developer Deutsche ReGas is hoping to commission the Neptune FSRU at the port of Lubmin before the end of December. The FSRU arrived into the port on Dec. 16. "Our goal is to be able to start supplying gas as soon as possible," Deutsche ReGas chairman Stephan Knabe said Dec. 16. "But the commissioning can only take place when all the necessary permits have been obtained. We continue to assume December," he said. Deutsche ReGas had said previously the terminal would be technically ready by Dec. 1, but a number of permits remain outstanding, while work on the FSRU at the nearby port of Mukran was also dependent on weather conditions. RWE, meanwhile, plans to deploy a state-backed FSRU at Brunsbuttel in January, later than originally hoped. "According to current planning, it is expected that the construction work for the operation of the FSRU in the port will be completed in January," an RWE spokesperson said Dec. 15. The FSRU will then be able to dock and be connected to the newly constructed technical infrastructure, the spokesperson said. The FSRU reported to be in line to serve Brunsbuttel is the Hoegh Gannet, which is currently in Brest, France, according to Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights. Earlier this year RWE had flagged that the first cargo to arrive at the port would be LNG it had contracted to buy from the UAE, which was originally intended to be delivered in December. Both the FSRUs at Wilhelmshaven and Brunsbuttel are to be supplied with LNG by Uniper, RWE and EnBW unit VNG under a memorandum of understanding signed with the German economy ministry to guarantee their full use until March 2024. Capacity bookings Three other state-supported FSRUs are under development and are due online by the end of 2023 at: Stade (Hanseatic Energy Hub - HEH); Lubmin (RWE/Stena-Power); and Wilhelmshaven (TES/E.ON/Engie). The German economy ministry said in September that the FSRUs at Brunsbuttel and Stade would be operated only until permanent onshore terminals go into operation in 2026. Both permanent terminals have been buoyed in recent weeks by binding capacity bookings and related supply deals. German utility EnBW said this month it had booked 3 Bcm/year of capacity at HEH's planned 13.3 Bcm/year capacity onshore terminal at Stade from the start of commissioning, expected in 2026. As well as booking LNG import capacity at Stade, EnBW will also have the option to move to ammonia as a hydrogen-based energy source at a later date. "This possibility is open to all Hanseatic Energy Hub customers with a long-term contract of more than 10 years," it said. For the permanent 8 Bcm/year site at Brunsbuttel, the US' ConocoPhillips, chemicals giant Ineos and RWE have all booked long-term capacity. ConocoPhillips said in late November it had agreed two long-term agreements with QatarEnergy for the supply of up to 2 million mt/year of LNG into Brunsbuttel for a period of at least 15 years. The LNG will be supplied on a DES basis from Qatar's major North Field East and North Field South expansion projects, in which ConocoPhillips is a partner. Ineos, meanwhile, said Dec. 1 it had signed a long-term agreement with Sempra Energy's infrastructure unit for the supply of LNG from the proposed Port Arthur export terminal in the US. First deliveries from Port Arthur are expected in 2027. The agreement includes a 20-year commitment for 1.4 million mt/year from the first phase of the project, while the two companies also signed a non-binding deal for an additional 0.2 million mt/year from the project's second phase. The permanent Brunsbuttel terminal is expected to begin operations in 2026, although efforts are underway to accelerate the startup, and its capacity could be expanded to at least 10 Bcm/year.

China's natural gas demand in 2023 is expected to rebound from 2022 levels on the back of a gradual opening up of the economy, but high global energy prices and macroeconomic concerns will continue to pressure gas consumption levels. "We expect Chinese gas demand in 2023 to rebound from the low base in 2022, surpassing the 2021 levels, but it will not be a 'V-shaped' rebound," Jenny Yang, senior director, gas, power and climate solutions, S&P Global Commodity Insights, said. "On one hand, a key assumption is that while China has started to relax COVID-related measures, a full exit from COVID controls will still take time and won't likely happen until the second quarter of 2023," she said. "On the other hand, the economy will still be under the pressure of the real estate market downturn and weak exports." Yang said while China's real GDP growth is forecast to improve from 3% in 2022 to 4.4% in 2023, renewable power generation will continue to surge, and policies to rely on domestic coal production will remain in place, which will impact gas demand growth. As a consequence, China's natural gas demand is expected to reach around 364 Bcm in 2022 and grow by around 6% year on year to around 386 Bcm in 2023, according to S&P Global Commodity Insights data. The 2022 gas demand number is nearly 1.4% lower than the National Energy Administration's 369 Bcm demand figure for 2021, making 2022's gas demand the first year-on-year decline in history. "Chinese natural gas demand is still expected to grow but at a much slower rate than historic levels [in 2023], up by around 6% year on year, in part due to new contracts that are expected to support LNG import growth," Szehwei Yeo, LNG analyst at S&P Global Commodity Insights, said. Roman Kramarchuk, Head of Energy Scenarios, Policy & Technology Analytics at S&P Global Commodity Insights, said that for commodities demand in 2023, the most important fundamental factor will be China's COVID policy, as demand softness in 2022 due to lockdowns was a key safety valve for oil, gas and coal markets, while Europe scrambled to replace Russian energy. LNG imports China has been expanding natural gas import capacity and the new LNG import contracts linked to new terminals will help support imports in 2023. China's LNG receiving capacity is estimated to increase to 130 million mt/year by 2023 and nearly 200 million mt/year by 2025, compared with current capacity of 101 million mt/year, the Shanghai International Energy Exchange said June 15. Around nine new LNG term contracts are scheduled to start deliveries in 2023, more than offsetting the two short-term contracts expiring at the end of 2022, according to market sources. "Spot LNG prices will likely remain high in 2023 as Europe refills storage. China will divert cargoes like it did this year (2022) under the combined impact of weak gas demand growth and high spot prices. A price-sensitive market, China will limit spot purchases until prices fall into the $15-$20/MMBtu range or lower," Yang said. "At the same time, Power of Siberia pipeline imports will continue to ramp up, now that the Kovykta gas field has started production. As a result, China's LNG imports will rise from 2022 lows but only marginally, by about 3 million mt year on year, supported by new term contracts," Yang said. S&P Global Commodity Insights expects China's LNG imports to rise to around 65 million mt (89.8 Bcm) in 2023. In November, state television CCTV reported that annual gas supply from the Russia-China natural gas pipeline's eastern route is expected to rise to 22 Bcm in 2023, 30 Bcm in 2024, and 38 Bcm in 2025, based on the current schedule, up from around 15 Bcm in 2022. Yang also said China will continue to look for term supply to support long-term demand growth while limiting exposure to spot market price volatility. China signed 34 LNG contracts, including short-term, medium-term and long-term contracts, between 2021 and 2022 year-to-date, with a total contract volume of 45.91 million mt, starting delivery from 2022 to 2027, calculations showed. Out of the 34 contracts, 15 were between China and the US with a volume of about 21 million mt/year, accounting for nearly half of the total, and five contracts totaling 11.5 million mt were with Qatar, coming a close second. This included the longest contract between Sinopec and Qatar Energy for 4 million mt/year of LNG for 27 years. Given that China aims to hit nearly 200 million mt/year of LNG imports by 2025, it remains under-contracted, and sources have said several long-term contracts are being negotiated and could be finalized when markets stabilize in 2023. Uncertainties Yang said other factors driving gas demand include weather conditions, particularly this coming 2022/23 winter -- which will determine how much gas from storage needs to be replenished globally -- and unplanned outages at liquefaction projects. Other developments expected to influence gas markets in 2023 are the "14th Five-Year Plan on Natural Gas," a key document guiding China's natural gas market development that is yet to be published, and gas price reforms in the midst of volatile import costs. "The key company-level strategies to watch out for include passing through costs to the downstream market in the current high-cost environment, procuring new supply to avoid exposure in the spot market, developing new LNG receiving infrastructure amid the overall low utilization of existing projects and new capacity already under construction, and proposed, new interprovincial transmission pipeline development for new supply to reach markets," she said. However, China is unlikely to make any major change in its approach to the role of natural gas/LNG in the energy mix in 2023. "Using natural gas to displace oil and coal is consistent with the two long-term carbon goals of peaking carbon emissions by 2030 and carbon neutrality by 2060," Yang said.

December 14, 2021 8:30 am - 3:30 pm CST Online Pricing: Complimentary Where energy connects The South American Virtual Forum offers attendees an in-depth look at the South American commodities markets, with a particular emphasis on Argentina and Colombia. We’ll examine oil and gas, LNG, biofuels, petrochemicals , and the impact of the energy transition on these industries. Join us from the comfort of your desk, to explore the issues impacting the markets today, and projections for the future, in topical sessions featuring Platts’ methodology, assessments, and pricing. What's included You can expect live presentations, real-time interaction, and the opportunity to engage in questions and answers with the speakers throughout, right from your desk. Key topics we'll cover -Latin American economic overview-South American upstream-Refined products markets-Shipping and freight markets-Petrochemicals demand and outlook-Biofuels and biodiesel in regional markets-Natural gas and LNG outlook-South American metals outlook  REGISTER NOW MORE INFO

China's natural gas demand in 2023 is expected to rebound from 2022 levels on the back of a gradual opening up of the economy, but high global energy prices and macroeconomic concerns will continue to pressure gas consumption levels. "We expect Chinese gas demand in 2023 to rebound from the low base in 2022, surpassing the 2021 levels, but it will not be a 'V-shaped' rebound," Jenny Yang, senior director, gas, power and climate solutions, S&P Global Commodity Insights, said. "On one hand, a key assumption is that while China has started to relax COVID-related measures, a full exit from COVID controls will still take time and won't likely happen until the second quarter of 2023," she said. "On the other hand, the economy will still be under the pressure of the real estate market downturn and weak exports." Yang said while China's real GDP growth is forecast to improve from 3% in 2022 to 4.4% in 2023, renewable power generation will continue to surge, and policies to rely on domestic coal production will remain in place, which will impact gas demand growth. As a consequence, China's natural gas demand is expected to reach around 364 Bcm in 2022 and grow by around 6% year on year to around 386 Bcm in 2023, according to S&P Global Commodity Insights data. The 2022 gas demand number is nearly 1.4% lower than the National Energy Administration's 369 Bcm demand figure for 2021, making 2022's gas demand the first year-on-year decline in history. "Chinese natural gas demand is still expected to grow but at a much slower rate than historic levels [in 2023], up by around 6% year on year, in part due to new contracts that are expected to support LNG import growth," Szehwei Yeo, LNG analyst at S&P Global Commodity Insights, said. Roman Kramarchuk, Head of Energy Scenarios, Policy & Technology Analytics at S&P Global Commodity Insights, said that for commodities demand in 2023, the most important fundamental factor will be China's COVID policy, as demand softness in 2022 due to lockdowns was a key safety valve for oil, gas and coal markets, while Europe scrambled to replace Russian energy. LNG imports China has been expanding natural gas import capacity and the new LNG import contracts linked to new terminals will help support imports in 2023. China's LNG receiving capacity is estimated to increase to 130 million mt/year by 2023 and nearly 200 million mt/year by 2025, compared with current capacity of 101 million mt/year, the Shanghai International Energy Exchange said June 15. Around nine new LNG term contracts are scheduled to start deliveries in 2023, more than offsetting the two short-term contracts expiring at the end of 2022, according to market sources. "Spot LNG prices will likely remain high in 2023 as Europe refills storage. China will divert cargoes like it did this year (2022) under the combined impact of weak gas demand growth and high spot prices. A price-sensitive market, China will limit spot purchases until prices fall into the $15-$20/MMBtu range or lower," Yang said. "At the same time, Power of Siberia pipeline imports will continue to ramp up, now that the Kovykta gas field has started production. As a result, China's LNG imports will rise from 2022 lows but only marginally, by about 3 million mt year on year, supported by new term contracts," Yang said. S&P Global Commodity Insights expects China's LNG imports to rise to around 65 million mt (89.8 Bcm) in 2023. In November, state television CCTV reported that annual gas supply from the Russia-China natural gas pipeline's eastern route is expected to rise to 22 Bcm in 2023, 30 Bcm in 2024, and 38 Bcm in 2025, based on the current schedule, up from around 15 Bcm in 2022. Yang also said China will continue to look for term supply to support long-term demand growth while limiting exposure to spot market price volatility. China signed 34 LNG contracts, including short-term, medium-term and long-term contracts, between 2021 and 2022 year-to-date, with a total contract volume of 45.91 million mt, starting delivery from 2022 to 2027, calculations showed. Out of the 34 contracts, 15 were between China and the US with a volume of about 21 million mt/year, accounting for nearly half of the total, and five contracts totaling 11.5 million mt were with Qatar, coming a close second. This included the longest contract between Sinopec and Qatar Energy for 4 million mt/year of LNG for 27 years. Given that China aims to hit nearly 200 million mt/year of LNG imports by 2025, it remains under-contracted, and sources have said several long-term contracts are being negotiated and could be finalized when markets stabilize in 2023. Uncertainties Yang said other factors driving gas demand include weather conditions, particularly this coming 2022/23 winter -- which will determine how much gas from storage needs to be replenished globally -- and unplanned outages at liquefaction projects. Other developments expected to influence gas markets in 2023 are the "14th Five-Year Plan on Natural Gas," a key document guiding China's natural gas market development that is yet to be published, and gas price reforms in the midst of volatile import costs. "The key company-level strategies to watch out for include passing through costs to the downstream market in the current high-cost environment, procuring new supply to avoid exposure in the spot market, developing new LNG receiving infrastructure amid the overall low utilization of existing projects and new capacity already under construction, and proposed, new interprovincial transmission pipeline development for new supply to reach markets," she said. However, China is unlikely to make any major change in its approach to the role of natural gas/LNG in the energy mix in 2023. "Using natural gas to displace oil and coal is consistent with the two long-term carbon goals of peaking carbon emissions by 2030 and carbon neutrality by 2060," Yang said.

Extreme volatility in the global LNG market in 2023 will continue to encourage US LNG export terminals to run at high levels, but US Henry Hub prices stand to fall as liquefaction capacity additions flatline, according to S&P Global Commodity Insights' latest 2023 energy outlook. A lack of new liquefaction facilities coming online globally stands to constrain natural gas supply growth despite persistently high prices, according to the outlook. The result will be global gas markets forced to balance on demand destruction and existing stocks instead of LNG supply growth, a dynamic that will be particularly apparent in Europe, where gas and power markets may be even tighter in 2023 as the region faces its first year without significant volumes of Russian pipeline gas. "There is no slack in the system," Michael Stoppard, global gas strategy lead and special adviser at S&P Global, said during a Dec. 8 briefing with reporters. "So we can expect a continuation and a reinvigoration of extreme market volatility that we have seen in both gas and power prices. "Disruptions on the supply side and any clear deterioration of economic output will be met by markets with a volatile price response." Europeans have scrambled to build LNG import infrastructure in an effort to find alternatives to pipeline deliveries from Russia following its invasion of Ukraine in late February. Constraints at existing European regasification terminals in 2022 have led to a dislocation between the northwestern European delivered LNG price and the continental TTF price, with the Platts DES Northwest Europe reaching a record discount of more than $29/MMBtu to TTF in early October before tracing back to around $10/MMBtu currently. S&P Global expects a large increase in European import infrastructure over the next year that could ease the bottlenecks, with some 10 new LNG import terminals proposed or constructed that could be online by the end of 2023. Loosened regasification constraints are expected to tighten the spread between delivered LNG at European terminals and continental gas prices, said Ross Wyeno, lead analyst for LNG Americas at S&P Global. "Our belief is that the net impact of that will be to draw global LNG prices upwards this winter so that Asian buyers are forced to directly compete with the gas buyers within Europe," Wyeno said. "Then potentially we could see prices trailing off a bit more next summer." Across energy markets, China's coronavirus policy is the most important fundamental factor for global energy demand in 2023, said Dan Klein, head of Energy Pathways at S&P Global. Lockdowns softened China's energy demand in 2022, providing relief for gas, oil, and coal markets as Europe scrambled to replace energy supplies from Russia following its invasion of Ukraine in late February. But the S&P Global outlook presumes China's total energy demand will increase by 3.3 million barrels of oil equivalent per day in 2023 from virtually no growth in 2022, representing 47% of the global energy demand growth next year. US LNG export additions flatline in 2023 Persistently high prices have kept existing US LNG terminals running at or near close to full capacity in 2022. US feedgas demand was about 11.5 Bcf/d Dec. 8, after hitting nearly 13 Bcf/d Dec. 1, according to S&P Global data. The Dec. 1 flows marked the highest level of US LNG feedgas deliveries since before an early June explosion and fire at the Freeport LNG plant in Texas pushed some 2 Bcf/d of gas back into the domestic market due to loss of feedgas demand. Freeport LNG is working to resume production by the end of the year. Apart from the Freeport return, S&P Global described a "distinct lack of growth" in North American LNG capacity until late 2024, which is when the developer of the 18.1 million mt/year Golden Pass facility under construction in Texas expects to start production. The lack of new US LNG export capacity and domestic production that is expected to rise by nearly 3 Bcf/d are factors contributing to softer Henry Hub prices in 2023. S&P Global forecasts prices at Henry Hub will average $5.47/MMBtu across 2023, peaking near $7/MMBtu across the first quarter before dipping below $5/MMBtu across the second and third quarters of the year amid tight gas balances and economic headwinds in the US and abroad. Companies close to the heart of the US gas value chain concur that 2023 is likely to offer more gas price volatility, with Freeport LNG's restart one of several factors promising to stir markets in the year ahead. "I think there will certainly be volatility," Kinder Morgan CEO Steve Kean told analysts at the Wells Fargo Midstream and Utilities Symposium on Dec. 8. "And as we get LNG back in ....those are big moves, big chunks of demand coming on."

23-25 January 2023 | Renaissance Santo Domingo Jaragua Hotel & Casino, Santo Domingo, Dominican Republic Navigating the new world of energy The Caribbean Energy Conference is the premier energy event, giving you critical information about the transformation of energy markets in the region. Network and do business with colleagues representing over 20 countries from around the world. REGISTER NOW MORE INFO

Freeport LNG delayed its restart target until the end of the year, about two weeks beyond its previous estimate, as it works with US regulators to secure all approvals necessary to resume production, the operator said Dec. 1. The three-train, 15 million mt/year capacity terminal in Texas, which serves about 15% of US liquefaction output, has been offline since a June explosion and fire. The operator estimated Nov. 18 that it would resume production in mid-December, which represented a delay of about a month from its previous target. The latest timeline reflects some progress on the regulatory front, although work continues to secure all necessary clearances. Freeport LNG has approval from agencies to complete critical repairs and commence reinstatement of certain systems, spokeswoman Heather Browne told S&P Global Commodity Insights in response to questions. Based upon current progress and subject to the operator continuing to meet necessary requirements, Freeport LNG now anticipates that "restart of liquefaction to be achieved around year-end," Browne said. Freeport LNG has long-term offtake deals with South Korea's SK E&S, Japanese utilities JERA, and Osaka Gas, as well as French energy major TotalEnergies. Some counterparties have had to rely more heavily on the spot market for LNG supplies during the outage. Freeport LNG has said its three liquefaction trains will be restarted and ramped up in a slow and deliberate manner, with each train starting separately before restarting a subsequent train. It previously said it expected that about 2 Bcf/d of production would be achieved in January. The terminal's capacity is around 2.3 Bcf/d. Full production utilizing both docks remains anticipated to be achieved in March, Freeport LNG said. Investigators with the US Pipeline and Hazardous Materials Safety Administration have been present at the site throughout the course of the probe and planned to be there to consider restart approval, said a person familiar with the situation.