Hot weather, maintenance at power generation facilities and LNG production outages have combined to push Asian natural gas prices higher.
The July Japan-Korea Marker futures contract was trading above $11/MMBtu after climbing 7% last week.
One of three trains at Chevron Corp.’s Gorgon liquefied natural gas export facility in Western Australia, which mainly serves Asia, remains offline and is expected to be out of service until early next month.
Elsewhere, Petronas has resumed service at its Bintulu LNG complex in Malaysia after it was offline for about a week following a power outage on May 10. The company started loading cargoes again May 16.
Spot market activity for near- and longer-term cargoes has also ramped up considerably in Asia.
The Electricity Generating Authority of Thailand, Gail Ltd., Gujarat State Petroleum Corp. and Korea Midland Power Co. have issued buy tenders that close this week, according to Kpler data. Meanwhile, buyers in Japan, South Korea and Vietnam all closed additional buy tenders over the last week.
In addition to tenders from Gail and Gujarat in India, India Oil Corp. Ltd. (IOC) and Vitol Inc. also closed purchases last week for delivery to India. A heatwave in the country is likely to keep buyers there in the spot market, said Rystad Energy analyst Masanori Odaka.
IOC reportedly signed a 10-year deal to buy 1 million metric tons/year (mmty) of LNG from TotalEnergies SE.
Temperatures are also forecast to be above normal in Japan and South Korea over the next two weeks, according to Maxar’s Weather Desk.
Extensive maintenance is planned across Japan’s energy mix as well, with an average of 12.6 GW of outages in the hydropower sector for May, compared to only 8.32 GW of outages in April, Odaka said.
He added that gas-fired power plants in the country have 5.3% more maintenance and outages this month versus April, while coal-fired power plants have 6.3% more maintenance over the same time.
Natural gas prices were also higher in Europe on Monday, where the fuel has been more economic for the power sector to burn than coal, which has stoked demand. Goldman Sachs analyst Samantha Dart said in a recent note to clients that if the Title Transfer Facility (TTF) doesn’t narrow its discount to coal-fired power costs, European gas prices are likely to be stable throughout the summer.
The July TTF contract closed 3% higher on Monday to finish above $10, adding to last week’s 6% gain.
Norwegian production and processing facilities are scheduled for heavy maintenance starting this week, while renewable output has been weak as well.
Meanwhile, In the United States, potential cooling demand and ongoing domestic production cuts pushed Henry Hub higher on Monday. The June contract finished 13 cents higher at $2.75, while the July contract gained 12 cents to close at $2.90.
Updated Wood Mackenzie estimates as of early Monday showed daily production hovering around 97-98 Bcf/d over the weekend, lagging year-earlier output of around 101.7 Bcf/d.
LNG feed gas flows were holding steady at 12.3 Bcf/d now that the Freeport facility in Texas has all three trains back in service. Flows were down from 13.1 Bcf/d late last week, mainly because of a drop in nominations from Cheniere Energy Inc.’s Corpus Christi LNG terminal in South Texas.
In unrelated news last week, FERC told Cheniere it would delay the environmental assessment to add two more liquefaction trains at the Corpus Christi facility. The Federal Energy Regulatory Commission said it needed more information from the company about its eighth and ninth trains. The 3 mmty project would boost the facility’s overall output to nearly 30 mmty after another 10 mmty expansion is completed.
FERC has until September to authorize the two-train project, which is also still awaiting a license from the U.S. Department of Energy (DOE) to export to non-free trade agreement (NFTA) countries. DOE has suspended NFTA export application reviews while it studies whether more U.S. LNG exports are in the public’s interest.
