Japanese power utilities, in particular JERA and Kansai Electric, are counting on additional LNG in the spot market to cover September’s corresponding demand. (Source: Shutterstock)
Japan is seeking LNG, potentially from the U.S., to cover summer-related electricity demand that could extend into early October amid reduced gas import supply.
Above-average temperatures are forecast for most regions of Japan through at least the end of September, according to Rystad Energy’s Senior Analyst Masanori Odaka.
“Hotter temperatures and limited prompt supply have compelled Japanese importers to secure spot LNG for September delivery,” Odaka said Sept. 10 in a research report.
Japanese power utilities, in particular JERA and Kansai Electric, are counting on additional LNG in the spot market to cover September’s corresponding demand, “which is relatively prompt and is likely to command a slight premium to the market level due to limited prompt supply,” Odaka said.
But Japan isn’t facing LNG supply shortages alone.
“At the same time, supply from Australia’s Ichthys LNG, Northwest Shelf LNG, and Malaysia’s MLNG remains reduced,” despite the Queensland Curtis LNG Train 1 export terminal in Australia resumed operations on Sept. 6, four days after it went offline, Odaka said.
Russia’s invasion of Ukraine in early 2022 led to a drastic decline in Russian energy exports to Europe and the U.K., prompting a major energy crunch. The U.S. was able to provide LNG to many European countries but at the expense of Asian countries that were priced out of the market.
Following Russia’s invasion, both Europe and Asia remain as the world’s largest LNG importing regions, the International Gas Union (IGU) said in a recent report. Also, the U.S. has surpassed Australia as the world’s largest LNG producer.
U.S. LNG projects exported an average 13.4 Bcf/d during Sept. 2 through Sept. 9, compared to 13.0 Bcf/d in the same period in 2023, according to Rystad.
The spot LNG delivery for September settled at $12.78/ MMBtu on Aug. 15, according to Rystad. Europe’s Title Transfer Facility traded around $12/ MMBtu on Sept. 9.
“Portfolio players and traders with U.S.-origin LNG have the incentive to send their cargoes to Europe as the arbitrage for U.S. LNG is closed for Asia,” Odaka said.
Europe’s underground storage facilities were approximately 93% full as of Sept. 8, similar to the level seen in 2023, according to Rystad.
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