"Asia emerges as the preferred destination for US LNG, fueled by increasing summer demand amid the ongoing heatwave.

Japanese utilities seek additional volumes for August-September amidst robust regional imports, totaling 68 Mt in Q2 2024 — a significant surge from previous years.

Separately, Woodside Energy's US$900 million acquisition of Tellurian signals a transformative move, potentially positioning them as a global LNG powerhouse”

Asian spot liquefied natural gas (LNG) prices for September traded 1.4% lower week-on-week at around $12 per million British thermal units (MMBtu) on 23 July.

Meanwhile, on 23 July, October 2024 financial derivatives traded around $12.1 per MMBtu, down 3.6% from the previous week.

In Europe, the Title Transfer Facility (TTF) for August traded at approximately $10 per MMBtu, down 3.6% from last week, as noted on 23 July.

Asia remains the preferred destination over Europe for US free-on-board (FOB) LNG cargoes.

The arbitrage opened again on 23 July, after it was briefly closed on 16 July.

Some Asian LNG importers show interest in purchasing additional LNG

The Russian LNG project Sakhalin 2 has resumed production from both trains. Maintenance on the second train was completed on July 19 or 20.

The liquefaction project had been halted for maintenance on the first train in mid-June, with maintenance on the second train immediately following.

Meanwhile, the Grand Mereya LNG carrier departed Sakhalin 2 on July 18 with a full cargo.

Additionally, Sakhalin Energy has previously sold multiple LNG cargoes scheduled to load in the second half of August.

Elsewhere in Russia, Yamal LNG delivered its first LNG cargo to Asia via the Northern Sea route this year on 14 July, discharging at China’s Fujian LNG.

This was approximately two weeks later compared to the previous year.

Some Asian importers have shown interest in additional spot volumes during the northern hemisphere summer due to recent higher-than-expected temperatures.

Japanese power utilities are currently seeking August-September volumes.

Weather forecasts from the Japan Meteorological Agency are pointing toward an 80% probability of above-average temperatures across Japan until 26 July.
Regions west of Tokai forecasting an 80% probability of above-average temperatures for 27 July to 2 August.

The rainy season has ended in most regions of Japan except Tohoku and Hokuriku.

South Korea also forecasts a 50% probability of above-average temperatures for the week from 29 July to 4 August.

The rainy season has ended in most regions of Japan except Tohoku and Hokuriku.

South Korea also forecasts a 50% probability of above-average temperatures for the week from 29 July to 4 August.

Imports into Asia have the potential to remain robust if the ongoing heatwave continues, as the region imported around 68 million tonnes (Mt) of LNG in the second quarter of 2024, which is 14% and 10% higher compared to the same period in 2022 and 2023, respectively.

On 24 July, major power utilities in Japan reported combined LNG storage levels of 2.35 Mt as of 21 July.

This represents a 6.8% week-on-week increase and higher than the 1.94 Mt reported at the end of July 2023.

It is also 7.3% higher than the five-year average for the end of July from 2019 to 2023.

In Japan’s Ibaraki Prefecture, the 350-megawatt (MW) Kashima Kyodo unit 3 gas-fired power plant, co-operated by Jera and Nippon Steel, has faced an outage since 19 July due to turbine issues and, as of 24 July, has no planned restart date.

According to a Japan Electric Power Exchange filing, Kashima Kyodo unit 5 (300-MW nameplate capacity) also halted operations from 23-25 July to adjust for fuel availability.

Tohoku Electric announced on 18 July that the restart of the 825 MW Onagawa 2 nuclear power plant will be delayed by two months, pushing it back from September to November 2024.

In South Korea, Hanul nuclear power plant unit 5 began its 14th planned maintenance on 19 July while unit 3 has planned maintenance scheduled from 27 July for approximately 2 months.

Eastern Japan has not restarted any nuclear power plants since the nationwide shutdown in the wake of the 2011 Fukushima disaster.

Meanwhile, 12 units have restarted in western Japan since 2011, with a combined name-plate capacity of approximately 11.6 gigawatts (GW).

About 9.55 GW of this capacity from the 12 units is available for July when considering lowered output operation plans and maintenance works.

However, as stated in previous reports, Japan will have planned maintenance at three units in August 2024, meaning the available nuclear capacity for next month is anticipated to be around 9.1 GW, approximately 10% lower compared to August 2023.

Norwegian supply slightly down while flows from Russia increased in Europe

LNG for September delivery to Northwest Europe traded sideways at $10.6 per MMBtu on 24 July, 1% higher week-on-week.

Total pipeline flows from Norway into Europe were down 4.6% week-on-week to approximately 320.2 million cubic meters per day (MMcmd) on 22 July.

Norwegian operator Equinor faced an unplanned outage at its Visund gas field on 19 July while its Kristin field faced an outage due to process problems on 22 July with an uncertain duration as of 24 July.

Meanwhile, gas pipeline flows from Russia to Europe were up 4.6% week-on-week to approximately 96.07 MMcmd as of 21 July, but lower than the 97.74 MMcmd on 21 July 2023.

France’s Montoir LNG terminal is extending its end of maintenance for the fifth time by another week, with the new expected restart in mid-August.

Supply from the US rebounds with Freeport restart

The hotter summer weather forecast remains the bullish factor in the US, with Western and northern Plains likely to hit elevated temperatures.

Despite this, front-month Henry Hub fell 4% week-on-week to $2.1 per MMBtu on 24 July.

Dry gas production is maintaining output above 102 billion cubic feet per day (bcfd).

The build-up of US underground storage rose 11 billion cubic feet (Bcf) week-on-week to 3,210 Bcf, but the pace of the build-up was slower than the previous week’s 65 Bcf increase.

Feedgas to LNG facilities rose 6% on the week, to 11.9 Bcfd, with average feedgas supply to LNG terminals for this month at approximately 11.5 Bcf as of 25 July, compared to 12.8 Bcfd in June 2024 and 12.7 Bcfd in July 2023.

The Freeport LNG terminal in Texas has resumed shipments following a shutdown ahead of the arrival of Hurricane Beryl on 7 July.

Vessel tracking data shows the Axios II LNG carrier loaded and left the facility on 21 July, however, two trains remained offline on 24 July based on feedgas levels still being around a third of capacity.

Freeport experienced a brief power drop on 24 July.

Meanwhile, the Corpus Christi LNG facility in Texas had 30% lower feedgas flows from 16-22 July due to planned maintenance work on its compressor station.

However, flows resumed to normal levels on 23 July, in line with its original dates.

Australia’s Woodside Energy announced on 22 July it had signed a $1.2 billion deal to purchase US LNG developer Tellurian, the operator of the 11 million tonnes per year Driftwood phase 1 project in the US Gulf Coast.

Elsewhere, the Altamira floating LNG terminal, operated by New Fortress Energy, is likely to delay the shipment of its first LNG cargo to August, compared with a previous target of July 2024.