After an eventful start to 2021 which saw the unexpected winter storm in Texas and the blockade of the Suez Canal, will the stage finally be set for global LNG to return to growth in the summer of 2021? Alex Froley, LNG Market Analyst at ICIS, summarizes key developments and performance for the first quarter of 2021 and explores what suppliers and buyers would be watching as we move into warmer weather.

The first quarter of 2021 saw LNG exports increase by just 1% compared to the same period last year. Cold weather in Asia increased LNG flows by around 8.3 million t from the previous year, but flows in Europe fell by 7.1 million t, compensating with pipeline gas and increased storage withdrawals. However, March saw a strong recovery with growth of 7% yoy, giving a good indicator of the recovery in LNG exports this spring. This trend is expected to continue, in part driven by demand for recharging gas storage sites on land in Europe.

Volatile prices at the start of 2021

The start of this year showed the potential for short-term volatility in LNG prices, fueled by blackouts, shipping congestion and strong demand. This made buyers reluctant to rely on short-term spot purchases and raised concerns about the shift in long-term contract volumes from oil indexing to the spot market. The volatility of oil prices, however, means that the best sourcing strategy can come from a diversified portfolio with a mix of contracts and indices.

The East Asian CIHI average index for spot cargoes valued between January and March was $ 9.143 / million Btu. Despite January’s price spikes, this price remained below the average crude oil price valued over the period of US $ 10.585 / million Btu, suggesting that indexation in the oil market is not always an automatic gain for buyers. The first month ICIS TTF average price for European gas during the period was US $ 6.486 / million Btu.

Tight supply / demand balance in China, Japan, South Korea and Japan, exacerbated by local production shutdowns during repairs to the Gorgon LNG plant in Australia, extreme cold and blackouts in parts of China and Japan, pushed spot prices to over US $ 30 / million Btu in January for a handful of cargoes purchased at the last minute. When you compare this with trades at around US $ 2 / million Btu during periods of excess supply in the summer of 2020, it shows the potential for extreme market volatility over short periods of time. That said, prices would not have risen as much if the supplies had been purchased two or three months earlier at prices below US $ 10 / million Btu. However, most LNG shipments to Asia remain on long-term contracts, normally with prices tied to the crude oil market.

The high spot prices in January in Asia were due to the sourcing of replacement supplies for lost production in the United States, requiring much longer transits. However, these problems were compounded by congestion in the Panama Canal, forcing some ships to take longer routes, and the unexpected blockage of the Suez Canal in March, raising concerns about security of supply and volatility. of the market.

Evolution of exports: elevators, slaughterers and stable players around the world


Theoretical market capacity has grown steadily over the past year, with the United States bringing nearly 15 million tpa of new production capacity with the start of third trains at factories in Cameron, Freeport and Corpus Christi. However, actual production and exports fell in the summer of 2020 due to low global gas prices after a warm winter and the impact of the coronavirus pandemic on gas demand. US factories cut back sharply, then had to restart slowly due to hurricanes in the Gulf of Mexico in fall 2020, followed by the deep freeze in Texas in February 2021.

In March, the resumption of domestic gas production allowed the liquefaction of U.S. feed gas at record rates of over 312 million m3/ d and the United States posted the largest year-on-year increase with exports up 2.4 million t from 1Q20.

Fueled by the restarting of the Damiette plant for the first time since 2012, the first quarter of this year also saw Egypt increase its exports to 2.0 million tonnes: five times the exports of 1Q20. The increase in domestic production from fields including Eni’s Zohr and Nooros fields means that the country can now meet its own demand while increasing its exports. Algeria also increased its year-on-year production in the first quarter from 2.6 million t to 3.3 million t with the return to service of the Skikda plant following repairs completed in July 2020.

Keep calm…

Exports from Qatar, the world’s largest LNG producer, and Australia were both relatively stable at around 20.0 million t. While also maintaining stable exports, Malaysia, which was the first country to have a floating production unit, started its second floating production facility, PFLNG Dua, with the loading of the first cargo on March 22, 2021. .

The fallers …

Russia, Norway, Nigeria, Trinidad and Equatorial Guinea all saw an annual decline in LNG exports during the first quarter. Norway fell to zero with the closure of the Hammerfest LNG plant following a fire in September 2020. The plant is expected to reopen in October 2021. The drop in exports from Nigeria and Trinidad in tonnes is likely linked to the maintenance and decline of local gas fields.

Look forward …

In February 2021, Qatar made a final investment decision to move forward with its massive expansion of the North field, which will increase its annual production from 77 million tpa to 110 million tpa by 2025. This will place the country leading export volumes. It is also moving forward with other parts of the supply chain with additional vessel orders, the reservation of long-term regasification capacity in Europe and the signing of new long-term contracts, including a recent agreement. of 2.0 million tpa over 10 years with the Chinese Sinopec.

Although Chevron has completed propane boiler crack repair work on two of its three-train Gorgon plant in Australia, the third train could undergo work later in the year. The slowdown in exports from Equatorial Guinea should be stopped by starting a new supply gas from the Alen gas field to the Punta Europa plant.

Import markets

East Asia remained the largest import region, importing an additional 8.3 million t compared to last year, for a total of 61.4 million t in the first quarter. Triggered by a cold winter, Japan regained its position as the leading importer, overtaking China in 4Q with an increase of 1.8 million t compared to 1Q20, bringing its total to 23.2 million t. Chinese imports in the first quarter increased by a third, but this is mainly due to lower flows last year with the outbreak of the coronavirus. South Korea and Taiwan also saw increases, as did Central and South America, with Brazil being the biggest climber due to increased gas production as reduced precipitation reduced the potential for hydroelectric production.

Europe, for its part, saw its imports drop by 7.1 million t, even if the month of March showed signs of recovery with a clear recovery in demand. Imports to the Middle East have also fallen due to the increase in the region’s own gas production. Southeast Asia saw declines, mainly due to the halving of Malaysia’s imports to 0.4 million t.


After turbulent markets influenced by weather conditions, power shortages, shipping disruptions and a global pandemic, LNG markets are expected to increase for the remainder of 2021, driven by a strong period of growth during the been in the United States with supply gas at a record rate of over 11 billion feet3/re.

After a cold winter, onshore gas storage facilities in Europe are much more empty and buyers will have to buy significantly more gas this summer than the past two years to replenish stocks. The increase in European injection needs this summer is therefore almost twice as large as the US cuts last summer, suggesting there should be room for a steady flow of cargo across the Atlantic. It also means that there should be room to absorb an additional 2.25 million tpa production over six summer months from Corpus Christi train 3 of 4.5 million tpa, which was not not in service at the same time last year.

Industry in East Asia may consider reviewing its gas storage capacities and other security of supply measures given winter price spikes and channel disruption. China is taking steps to increase its onshore gas storage, but currently still has much less storage as a proportion of its annual gas demand than Europe.

As always, the weather will be a crucial factor next winter. If the weather is very cold, the market could face tight times, although some buyers will be better prepared this year after learning from recent experiences. However, if next winter returns to the mild 2018/19 and 2019/20 winters, the market could start looking pretty long on gas again by spring 2022.

To download the full ICIS LNG Edge Trade Flow Report: Q1 2021, please visit here.

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