Global natural gas prices rise Chinas liquefied natural gas prices trend analysis

Global natural gas prices have surged

Since the beginning of this year, the price of natural gas has risen sharply, the spot price of natural gas in the three major international markets, America, Europe Asia, has hit the record high, which brings great challenges to this year's winter supply guarantee.

Gas prices in Europe have been rising since June 2020. After a winter peak in January 2021, they fall to a low point between May June, according to the natural gas price cycle, but they have been rising all the way this year. By early June, the Dutch TTF centre, the benchmark price for Gas in Europe, had reached 25 euros per megawatt hour, up around 5 euros per megawatt hour in previous years.

According to the International Gas Association's Third Quarter International Gas Price Report, spot gas prices in Europe rose 357% in the first nine months of the year, in the third quarter alone, European gas prices increased 2.5 times. Europe's gas market is at the centre of a global energy shock. Expert analysis, supply demand imbalance is a direct inducement.

In the United States, the price of natural gas has been on the rise since the beginning of 2021, except for a short spike in mid-February due to extremely cold weather.

The U.S. Energy Information Administration forecasts an average spot price of $5.67 per million British Thermal units for the 2021-2022 winter period October to March, the highest winter price since 2007-2008.

Analysis of price trend of Liquefied natural gas in China

In early November, the spot CIF price of LIQUEFIED natural gas in the international market reached about 7 yuan per cubic meter, while the domestic price remained stable as a whole. The average price of liquefied natural gas in local contracts was about 2 yuan to 3 yuan per cubic meter.

In the heating season, the overall balance of natural gas in China is still tight. Affected by extreme weather, the contradiction between supply demand may be prominent in some periods regions.

For natural gas heating, the demand for heating gas will increase by more than 20 million square meters per day for every 1℃ decrease in the daily average temperature in the main areas. In view of this problem, relevant departments have formulated a pre-plan of "reducing non-gas consumption protecting the people" to ensure that people need gas for living heating.

China's offshore gas fields are fully releasing natural gas capacity are expected to supply nearly 7 billion cubic meters of natural gas this winter next spring.

In The Puguang gas field in Sichuan province, daily wellhead gas production reached 25.2 million cubic meters since November, up 750,000 cubic meters October. Meanwhile, the Fuling shale gas field accelerated the production of new Wells, maintaining the daily production of 19 million cubic meters. Sinopec southwest Petroleum Bureau's daily gas output rose to 23 million cubic meters, a record high.

China has a low cost of natural gas, annual production of 190 billion cubic meters, in addition, in the import of natural gas, the lower price of the association accounted for the majority of natural gas.

Ranking proportion analysis of global gas production countries

European countries such as Germany, Italy so on mainly import pipeline gas, mainly supplied by Norway Russia. On September 10, the construction of nord Stream 2 gas pipeline between Russia Europe was fully completed. Nord Stream 2 has a total capacity of 55 billion cubic meters of gas per year. If the project is approved by Germany, it will greatly increase the volume of gas trade between Russia Western Europe.

In 2020, China imported 45.1 billion cubic meters of pipeline gas, accounting for 32.4% of total natural gas imports (total imports 139.1 billion cubic meters), mainly Russia Turkmenistan. The global market pattern of LNG has taken shape, importers are mainly concentrated in the Asia-pacific region. In 2020, the three East Asian countries of China, Japan South Korea imported 94 billion m3, 102 billion m3 55.3 billion m3 of LNG, accounting for 19%, 21% 11% of total global LNG imports, respectively. The three east Asian countries are mainly the United States, Australia Qatar.

In terms of price, the pipeline gas price is usually determined by long-term agreement between the two parties the gas price is relatively stable, while the LNG price is constantly changing with market demand varies widely among different regions. In particular, due to the geographical distance transportation costs, the gas market has a significant regional. There are significant differences in supply demand structure in different regions, leading to different gas pricing mechanisms in regional markets. In places with sufficient gas reserves, such as North America Britain, the gas price is mainly determined by domestic supply demand, while in Asia Central Asia, the gas price is mainly monopolized by the governments of supply demand.

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Source: Sina

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