Ahead of London International Shipping Week 2021, a six-part S&P Global Platts podcast miniseries looks into the pricing of alternative marine fuels for the global…
Aug 10, 2021
Ahead of London International Shipping Week 2021, a six-part S&P Global Platts podcast miniseries looks into the pricing of alternative marine fuels for the global shipping industry. In each episode, Platts editors investigate the current state of the major fuel alternatives, as the shipping sector seeks to reduce its greenhouse gas emissions ahead of stringent caps in 2030 and 2050. In episode one, we start with one of the frontrunners: LNG.
Nov 19, 2021
Asia-Pacific LNG shipping day rates have surged to an all-time high of around $300,000/day for a standard LNG carrier, as vessel demand outpaces a tight supply of ships in the region, ahead of peak winter season.
The S&P Global Platts Asia Pacific LNG shipping day rate was assessed at $300,000/day on Nov. 18, nearly six times that of around $50,000/day recorded at the start of November, along with a ballast rate of 150%, on the back of a reported fixture which was done earlier in the current week.
The Asia-Pacific day rate last hit a record high of around $175,000/day in mid-January and has been mostly rangebound between $50,000/day and $70,000/day for most of 2021. The Atlantic LNG shipping day rate also surged to around $245,000/day this week, but was still short of the nearly $300,000/day record high in January.
The prices reflect the daily hire rates for chartering a modern Tri Fuel Diesel Engine (TFDE) vessel for a short period in the Atlantic and Pacific basins, loading 25 to 45 days ahead of the day of assessment. The ballast rate, which reflects the extra cost to position and reposition vessels for a spot voyage, calculated as a percentage of the day rate.
Charterers who have LNG shipping requirements for end-December loading in the Pacific are receiving offers for above $300,000/day and with a ballast bonus covering the fuel and hire cost for the vessel to be redelivered at its next load port, a source with a charterer said, adding that currently offers are coming from trading houses.
The supply of ships in the Pacific is extremely constrained, and with winter on the horizon, charterers who need an LNG vessel to cover their short positions might likely have to pay up, brokers said, adding that the market can be expected to hold on higher side.
While some charterers felt the latest high-priced deal may not repeat for subsequent fixtures, others said the LNG shipping market was very bullish with no independent owners with ships available for charter, and everything booked out much earlier as charterers secured winter tonnage from March till July 2021.
In mid-October, the volume of LNG cargoes on the water had hit new record high, above the five-year average level, due to a steep contango in LNG price structure that saw the October-November JKM spread at nearly $14/MMBtu. This incentivized traders to book more vessels and likely lead to a surge in demand for LNG carriers that are yet to return to the spot market.
Shipbrokers said the momentum for LNG shipping demand was strong from the start of this year due to the energy crunch, as European and Asian LNG prices surged. In the current market, most charterers have covered their short positions in advance and with high JKM prices pulling in arbitrage from the West to the Far East, LNG vessel have been busy on longer voyages to Asia.
A 30-day round trip from the US Gulf to Europe gets doubled to around 70 days from the US Gulf to Asia, which takes away ships from the market for a longer duration of time and tonnage continues to remain very constrained.
This issue is exacerbated due to Panama Canal delays where the waiting time for vessels with unreserved slots has grown to around 10-15 days, according to brokers. Freight rates going forward, for January 2022 loading, will be very much dependent on the severity of winter in north Asia.
Nov 10, 2021
Dexter Wang, Asia Market Engagement Manager at S&P Global Platts, discusses how LNG and hydrogen will shape the global energy transition. Insights into critical issues such as LNG markets in the post-pandemic cycle and the emerging hydrogen economy was shared at the 7th Asia LNG & Hydrogen Gas Markets Conference (26-27 October), held in conjunction with Singapore Energy Week (SIEW) 2021.
With the growing focus on green growth and decarbonisation of the energy sector, what role will LNG and hydrogen play in the future energy mix?…
Jul 26, 2021
With the growing focus on green growth and decarbonisation of the energy sector, what role will LNG and hydrogen play in the future energy mix? The SIEW Energy Insights Webinar, held on 29 June in partnership with S&P Global Platts, brought together two panels of experts to discuss how LNG and hydrogen can support the transformation of the energy system.
LNG trade flows are evolving, challenging the established energy mix and changing commodity dynamics. Platts JKM™, the world’s leading LNG benchmark price, reflects deliveries into…
Oct 26, 2021
LNG trade flows are evolving, challenging the established energy mix and changing commodity dynamics. Platts JKM™, the world’s leading LNG benchmark price, reflects deliveries into the largest demand center for LNG: North Asia. Globally, Platts LNG spot price assessments provide timely data into inter-regional dynamics. Many of these benchmarks are further complemented by forward curves and also price forecasts, which are produced by Platts Analytics.
An unprecedented surge in European natural gas prices and tight global gas supply have propelled Asian spot LNG prices to record highs, creating a perfect…
Nov 03, 2021
An unprecedented surge in European natural gas prices and tight global gas supply have propelled Asian spot LNG prices to record highs, creating a perfect storm.
This new dynamic threatens to impact trade flows, trigger demand destruction and force buyers to reconfigure their energy procurement strategies.
At risk is energy security and affordability for many Asian players as the regions heads into peak winter with uncertainty around energy markets.
Click here for full-size infographic: http://plts.co/MQ3y30rZf9p
On this week’s Platts Market Movers Asia with Editor Aastha Agnihotri: Markets will closely watch out for the release of crude oil reserves by China, India…
Nov 22, 2021
On this week’s Platts Market Movers Asia with Editor Aastha Agnihotri: Markets will closely watch out for the release of crude oil reserves by China, India and Japan (00:14)
Other highlights from Asia’s commodity markets:
– Asian refiners to bring home equity crude barrels (00:47)
– Weak auto demand to weigh on Japan’s steel output (01:21)
– China’s aluminum prices under pressure (01:39)
– Indonesian thermal coal prices expected to edge lower (02:05)
– Asian polyethylene faces lukewarm demand but high crude costs (02:17)
– Asia Pacific LNG shipping day rates at an all-time high (02:36)
– Australian carbon credit prices at record highs (02:57)
– China’s soybean demand in focus (03:12)
Brazilian gas-to-wire operator Eneva and local energy investment company Servtec Investimentos e Participacoes signed a cooperation agreement to study construction of an LNG terminal at…
Nov 22, 2021
Brazilian gas-to-wire operator Eneva and local energy investment company Servtec Investimentos e Participacoes signed a cooperation agreement to study construction of an LNG terminal at Sao Luis in Maranhao state in the latest in a series of such projects in the works in Latin America’s largest economy, the companies said.
“The final investment decision on the terminal will be made after concluding the evaluations and obtaining the required licenses and authorizations to implement the project,” Eneva said in a statement Nov. 20.
The cooperation agreement expands the growing list of potential LNG projects under construction or being evaluated by oil and natural gas producers, power companies, investors and other players as Brazil implements more liberal regulations after the New Gas Market regime was signed into law earlier in 2021. The regulatory regime aims to increase domestic gas supplies, reduce prices and boost consumption ahead of a surge in offshore gas production from subsalt fields.
Brazil expects natural gas production to more than double to 260 million cu m/d by 2030, Mines and Energy Minister Bento Albuquerque said Nov. 18.
LNG imports will help Brazil meet domestic gas demand in the near term, with the number of terminals in operation in Brazil expected to rise to eight over the next few years from five currently. Brazil expects LNG imports to increase over the next two to three years amid rising demand but that Latin America’s largest economy will eventually turn into an LNG exporter in the next five to eight years, according to the minister.
Eneva is emerging as a potential key player in the sector after establishing itself as Brazil’s first gas-to-wire operator. The company is developing 10 onshore gas fields in the Parnaiba Basin, using the output from five fields already in production to generate 2.2 GW of electricity at gas-fired thermal power plants installed nearly at the wellhead. Power generation is expected to rise to 2.8 GW by end-2024, according to Eneva.
The Gaviao Real, Gaviao Vermelho, Gaviao Branco, Gaviao Caboclo and Gaviao Azul fields produce about 8.4 million cu m/d, according to Eneva. The company is also developing the Gaviao Preto, Gaviao Branco Norte, Gaviao Tesoura, Gaviao Carijo and Gaviao Belo fields.
Eneva also plans to repeat its gas-to-wire playbook in the Amazonas Basin. Eneva started production from the Azulao Field in September, producing about 9 million cu m/d, the company said. Eneva paid $54.5 million for Azulao in a 2017 deal with state-led producer Petrobras. The gas will fire a 117 MW power plant as well as be liquefied for transport via truck to Roraima state.
Under terms of the deal with Servtec, Eneva will have exclusive rights to the project until Dec. 30, 2022, which will then be followed by a right-of-first refusal to the project until Dec. 30, 2023, Eneva said. Should the deal advance, the two companies will form a joint venture company to develop the project, with Eneva retaining 51% and Servtec 49%.
The cooperation agreement also followed a similar model to a previous deal Eneva signed with Grupo Vale Azul Participacoes and Terminal Portuario de Macae, or Tepor, in September. Under that deal, Eneva agreed to evaluate its participation in GVA’s plan to expand logistics and infrastructure at the Macae port in Rio de Janeiro state. GVA has already received initial environmental and construction licenses for the project.
GVA plans to expand bulk liquid and oil handling facilities at the port, which acts as an offshore hub for oil companies operating in the Campos and Santos basins. The terminal project includes an LNG terminal capable of handling 21 million cu m/d.
Under terms of the agreement between Eneva, GVA and Tepor, Eneva has until exclusive negotiating rights to the project until Dec. 30, 2022, as well as preferential rights until Dec. 30, 2024.
“The agreement represents an important step in the company’s strategy of geographic diversification, with the development of a gas hub in the southeast that includes power plants, associated infrastructure and LNG supplies via a regasification terminal,” Eneva said at the time.
NextDecade LNG has pitched a limited amendment to its federal authorization for the Rio Grande LNG terminal that would allow it to voluntarily capture and…
Nov 18, 2021
NextDecade LNG has pitched a limited amendment to its federal authorization for the Rio Grande LNG terminal that would allow it to voluntarily capture and store CO2 produced at the terminal.
The change should allow the Federal Energy Regulatory Commission to “expeditiously find that the RGLNG Terminal’s contribution to global climate change with CCS systems operating would not be significant,” Rio Grande said in an application filed Nov. 17 (CP22-17).
The proposal comes as the US Court of Appeals for the District of Columbia Circuit has found fault with the original FERC authorization for the Brownsville, Texas, project, remanding FERC’s orders to the commission without vacating them.
The court’s Aug. 3 decision found FERC failed to adequately assess the impact of the projects’ greenhouse gas emissions because the commission neglected to answer arguments that it must use the social cost of carbon or some other generally accepted method to assess the effects. The panel also found FERC’s environmental justice analysis for the project to be flawed.
In its new, limited application, Rio Grande LNG said deploying CCS systems at the terminal will allow Rio Grande LNG to capture and store at least 90% of CO2 emissions that would have been emitted during commercial operation of the previously approved terminal — removing CO2 from both the feed gas and the exhaust flue gas.
It asserted the CCS deployment potentially would result in a CO2 equivalent emissions increase from operations of the terminal of 0.0001% at the national level, based on 2019 levels. That is down from estimates of an 0.17% increase at the national level, based on 2017 levels, contemplated in the originally approved authorization orders, the application said.
“Through this limited amendment, RGLNG seeks to answer the call for increased incorporation of CCS technology in the natural gas sector, and become an industry leader in producing greener LNG,” the application said. As for environmental justice concerns, Rio Grande said the lowered emissions would also “naturally result in an immediate reduction in the project’s already minor impacts on local environmental justice communities in south Texas.”
Pointing to its efforts to start construction of the LNG terminal early in 2022, it sought expedited consideration of the CCS systems to enable construction of those facilities “soon thereafter.”
NextDecade in March announced that it had launched the carbon capture project tied to the proposed terminal. At the time, it agreed to sell preferred stock to a group of investment firms to help advance the carbon capture project, as well as finalize commercial agreements needed to be able to sanction the up to 27 million mt/year export terminal later this year. NextDecade previously has estimated the all-in cost of the carbon capture project, including permanent storage, to be $63-$74/mt of CO2, before any benefit from US tax credits.
The efforts to curtail CO2 emissions arise as overseas LNG buyers, especially in Europe, have scrutinized how purchases of US shale gas could impact their emissions reduction goals.
Once captured, Rio Grande LNG told FERC the CO2 will be shipped via pipeline to an underground geologic formation that would be permitted by the Environmental Protection Agency as well as Texas regulators. The company said it has begun characterizing favorable storage sites under EPA guidelines.
Any pipeline needed to ship the CO2 to a sequestration site will be subject to jurisdiction of Texas agencies, rather than FERC, it added.
The CCS system will entail flue gas cooling, a CO2 absorber, an amine regenerator and reboiler, CO2 dehydration, CO2 compression and a water heat recovery unit and distribution, according to the FERC application.
The company also noted that NextDecade and subsidiaries have formed a joint project with Project Canary for monitoring, reporting and independent third-party certification of the GHG intensity of the LNG.
Four Japanese power utilities — Chugoku Electric, Kyushu Electric, Hokuriku Electric and Shikoku Electric — are restricting their use of LNG for power generation as…
Nov 18, 2021
Four Japanese power utilities — Chugoku Electric, Kyushu Electric, Hokuriku Electric and Shikoku Electric — are restricting their use of LNG for power generation as a result of unplanned outages at coal-fired power plants and higher-than-expected consumption, which has led to one of these utilities arranging for an additional cargo for delivery in early December.
Chugoku Electric and Kyushu Electric are restricting their use of LNG at gas-fired power plants as a result of multiple unplanned outages at their coal-fired power plants, according to documents presented at the Ministry of Economy, Trade and Industry’s electricity and gas policy subcommittee Nov. 18.
Chugoku Electric is currently in talks with its LNG suppliers for incremental supplies, advancing shipping arrangements and scrutinizing whether it will need additional procurements, while Kyushu Electric is in the midst of arranging for an LNG cargo to arrive in early December, the documents showed.
Chugoku Electric, which has also restricted its use of oil in order to keep stocks high for winter, had secured fuel oil for the maximum transport capability over November-February prior to its fuel restrictions, the documents showed.
Hokuriku Electric and Shikoku Electric are also restricting LNG use at their Toyama Shinko and Sakaide gas-fired power plants, respectively, as part of precautionary measures to avoid having to shut units in the face of higher than planned consumption, the documents showed. The two utilities are finding it difficult to seek additional LNG supply because their shipping schedules had already been fixed for one LNG storage tank each.
According to the documents, Shikoku Electric, which has also restricted its use of oil for fear of depleting its stockpile, is making an effort to procure oil domestically and from abroad because of prevailing market conditions and its fuel restrictions.
Chugoku Electric is restricting it use of LNG and oil over Nov. 7-30, while Kyushu Electric’s restricted use of LNG from Nov. 11 until Nov. 26, when it receives its next LNG cargo, according to the documents.
Hokuriku Electric is restricting its LNG use over Nov. 13-15 and Nov. 20-22, with Shikoku Electric restricting its use of LNG over Nov. 9-Dec. 20 and oil for Nov. 6-30, the documents showed.
Speaking at the subcommittee, Estuo Sato, secretary general of the Electricity and Gas Market Surveillance Commission (EGC), said that the commission has requested major power utilities submit detailed reports by Nov. 30 on fuel restrictions as well as on “block bidding” in the spot electricity market, among other moves, to analyze the market impact.
The power utilities’ fuel restrictions came to light following a Nov. 5 amendment to the Guidelines for Proper Electric Power Trade, which require power utilities to report reduced power output from fuel restrictions in the HJKS system.
The move is part of METI’s preventive measures aimed at tightening Japan’s power supply-demand balance in winter after the country experienced a power supply shortage last winter, when demand surged during extreme cold spells in January, forcing local power utilities to restrict gas-fired power generation due to low LNG stocks.
This was exacerbated by glitches at coal-fired power plants, low hydropower generation due to droughts, fluctuations in solar power output due to weather conditions, reduced oil-fired power generation capacity, and low nuclear power output.
METI also formulated its fuel guidelines Oct. 25 as a rough standard for power utilities’ fuel procurement — part of a slew of short-term policy actions following last winter’s tightened power supply-demand balance.
The fuel guidelines listed desired actions by the major power utilities, which have roughly 90% of Japan’s LNG thermal power by capacity, including to ensure “appropriate” LNG stocks from both tank operations and procurements, especially during high demand seasons in order to avoid tightening the supply-demand balance.
“As written in the fuel guidelines, power utilities are expected to secure adequate stocks surely, which could meet fluctuations [in demand] by properly updating their LNG supply contracts for the winter high demand season,” Masahiro Chikushi, director of the METI’s office for electricity supply policy, told the electricity and gas policy subcommittee.
“In order to prevent fuel restrictions in winter, we request to maximize their efforts including on additional procurements,” Chikushi said.
As of Nov. 15, Japan’s major power utilities held 2.2 million mt of LNG stocks, up by about 600,000 mt from a year ago, after declining 16% month on month at the end of October because of an increase in power demand in October, the documents showed.
The end-October LNG inventories stood at 2.07 million mt, still above the highest level in the last five years, down from 2.46 million mt at end-September, the documents showed.
With tight supplies and strong demand helping create large swings in global gas prices, Japanese utility JERA is staying the course. The world’s largest LNG…
Oct 25, 2021
With tight supplies and strong demand helping create large swings in global gas prices, Japanese utility JERA is staying the course.
The world’s largest LNG buyer is focused on its supply procurement and trading strategy.
Sunao Nakamura, a senior managing executive officer at JERA and chief of the Japanese company’s optimization department, spoke with Platts senior editor Harry Weber about the gas-pricing environment, where the market could be headed and how JERA is responding. He also addressed how the energy transition affects the decision-making process.
Stick around after the interview for Jeff Mower with the Market Minute, a look at near-term oil market drivers.