Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
LNG | Natural Gas

US LNG shut-ins 'unlikely' despite unfavorable netbacks to Asia, Europe

LNG | Natural Gas | Natural Gas (North American) | Oil | Crude Oil

Has the oil market found balance?

LNG | Natural Gas | NGL

Platts LNG Alert

Capital Markets | Commodities | Electricity | Energy | LNG | Natural Gas | Shipping | Leveraged Finance & High Yield | Materials | Building & Construction | Financial Services | Banking | Infrastructure | Structured Finance

Infrastructure Summit

LNG | Natural Gas | Oil | Steel | Petrochemicals

US-China tensions don't blunt US natural gas production, but imperil long-term trust: experts

US LNG shut-ins 'unlikely' despite unfavorable netbacks to Asia, Europe

Highlights

Prices in both Asia and Europe weaken further Friday

Potential for US gas to be used locally

Large premium still seen for winter delivery contracts

London — The US is not widely expected to reduce LNG exports in the short term despite the fact that weak pricing in Asian and Europe has seen nearly uneconomical netbacks to these key markets, according to European market participants.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The JKM - the benchmark for LNG spot delivered into southeast Asia - was assessed at $4.267/MMBtu at the end of Week 21, the lowest price for the contract since April 2016, S&P Global Platts price data showed.

Pricing in Asia has softened in recent days as a combination of solid term supplies into the region and weather forecasts not indicating a heat wave continued to dampen demand for spot LNG volumes.

In addition, the NBP June and July contracts have both broken cleanly below the 30 pence/therm mark in recent days, with the July contract having dipped below the 28 p/th mark in afternoon exchanges.

European hubs have been under pressure this summer on record-high LNG volume deliveries in addition to a large storage overhang carried over from the Winter 2018-19 delivery period.

As a result, both the JKM and NBP prompts are now largely in line with the cost of delivered US LNG into their respective markets.

In recent delivered deals of US cargoes into the Pacific, BP sold a cargo to JERA for July 5-7 delivery into the Asia Pacific from Cove Point at $4.40/MMBtu in the JKM Platts Market on Close assessment process on May 24.

LIMITED SCOPE FOR SLOWDOWN

Nonetheless, market participants believe that there is very limited scope for the US to reduce the volume of LNG exports.

"It is unlikely," said Jean-Christian Heintz, Head of LNG Broking at SCB Brokers, adding that a shut-in is "technically challenging, no producer likes to shut down a train as it involves a complex restart process. Commercially, it would not give a good signal, at a time when we expect new FIDs."

Heintz added that the weak Asian and European pricing was "an opportunity for the producers to expand their footprint elsewhere, which can be seen as a long-term investment, a put option, and to target new markets."

Thierry Bros, senior research fellow at the Oxford Institute of Economic Studies, said that "the US will continue to produce. To stop, they must be certain to have no option over the next two months and be certain of a negative margin during the period."

Bros also said that with the heavy maintenance period on the Norwegian Continental Shelf still to come and heightened concerns surrounding Groningen production, "the decline in European gas imports will be through a decrease in production and pipeline flows and not from LNG."

A Switzerland-based LNG trader said that "they [the US] won't stop gas production, but if LNG exports don't make sense anymore, consumption will have to happen locally through coal-to-gas switching."

Moreover, current price signals point to higher pricing in both Asia and Europe in the coming months.

The JKM Q4 2019 contract was assessed at $6.715/MMBtu on Friday with Q1 2019 even higher at $7.925/MMBtu. Similarly, the NBP Winter 2019 contract was seen trading at 52.40 p/th in mid-afternoon exchanges, more than 20 p/th higher than the June contract.

-- Gary Hornby, gary.hornby@spglobal.com

-- Lucie Roux, lucie.roux@spglobal.com

-- Desmond Wong, desmond.wong@spglobal.com

-- Edited by Jennifer Pedrick, newsdesk@spglobal.com