Asian liquefied natural gas (LNG) imports have reached a robust 68 million tonnes in the second quarter of 2024, marking a significant increase from previous years as the region grapples with rising summer demand amid an ongoing heatwave.
This surge has positioned Asia as the preferred destination for US LNG exports, with Japanese utilities actively seeking additional volumes for August and September.
Masanori Odaka, senior analyst at Rystad Energy, notes that the arbitrage for US free-on-board (FOB) LNG cargoes to Asia reopened on July 23, after a brief closure on July 16, underscoring the region’s continued preference over Europe for LNG imports.
Despite the strong demand, Asian spot LNG prices for September delivery have decreased by 1.4 per cent week-on-week to around $12 per million British thermal units (MMBtu) as of July 23.
Meanwhile, October 2024 financial derivatives traded at approximately $12.1 per MMBtu, down 3.6 per cent from the previous week.
Weather forecasts indicate a high probability of above-average temperatures across Japan and South Korea in the coming weeks, suggesting ongoing high demand for cooling.
In response, Japan’s major power utilities have reported LNG storage levels at 2.35 Mt as of July 21, a 6.8 per cent increase week-on-week and significantly above the five-year average.
On the supply side, Russia’s Sakhalin 2 LNG project has resumed production from both trains following maintenance, while the Yamal LNG project delivered its first cargo to Asia via the Northern Sea route this year on July 14.
In a significant industry development, Woodside Energy has announced a $900 million acquisition of Tellurian, a move expected to transform the company into a global LNG powerhouse.
As Asia’s LNG demand continues to heat up, the global energy market is likely to see significant implications, with potential shifts in trade flows and pricing dynamics in the coming months.
