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France's Total sees Q4 equity LNG sales price rise to $4.90/MMBtu

Highlights

Price lower than average spot JKM price of $7.98/MMBtu

Long-term LNG supplies traditionally oil-linked

Total's Q4 global gas price averaged $3.31/MMBtu

London — France's Total said Jan. 15 its average realized sales price for equity LNG in the fourth quarter of 2020 was $4.90/MMBtu, up from $3.57/MMBtu in the previous quarter.

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It is the fourth consecutive quarter Total has published an average sales price for its LNG, with the major saying it introduced the price to allow for a "better understanding" of the company's integrated gas business unit performance.

Despite rising compared with the previous quarter, the Q4 average sales price of $4.90/MMBtu was down by 25% year on year.

The Q4 average was also well below the average JKM front-month LNG price in the period, as assessed by S&P Global Platts, of $7.98/MMBtu.

A large amount of long-term LNG supply globally is contracted on an oil-indexed basis with a time lag, meaning the impact of the oil price fall in early 2020 on term LNG was only felt later in the year.

The JKM spot price, meanwhile, has staged a remarkable rally since it hit an all-time low in May, rising to double digits in mid-December and in mid-January to a new record high of $32.50/MMBtu.

In 2019, Total's equity LNG sales amounted to 16.3 million mt, up 47% from the previous year. Overall, LNG sales were up 57% on the year in 2019 at 34.3 million mt. Total will release its full-year 2020 earnings on Feb. 9.

The increase was due to the ramp-up of the Yamal LNG facility in Russia and Australia's Ichthys plant, as well as the startup of the first Cameron LNG train in the US.

Total also published Jan. 15 its average global gas price of $3.31/MMBtu, which was up from $2.52/MMBtu in Q3, but down on the $3.76/MMBtu average in Q4 2019.

Total has said previously the LNG price indicator reflected the combined effect of sales volumes and prices of long-term contracts and spot sales.

'Core' LNG ambition

In September, Total outlined its new corporate strategy with a focus on LNG and renewable energy growth.

LNG growth, CEO Patrick Pouyanne said, would be at the "core of our ambition."

Total LNG sales will reach 50 million mt/year by 2025, up from around 35 million mt/year now, Pouyanne said.

Total has interests in three major new LNG projects coming online in 2023-2024: the Novatek-operated Arctic LNG 2; Mozambique LNG; and Nigeria LNG's seventh train.

"We are in a good position to benefit from the evolution of the LNG market," Pouyanne said.