European natural gas prices fell again on Monday and weighed down those in Asia as pipeline imports increased and the market gained more clarity on when exactly Russia’s Nord Stream 2 (NS2) pipeline might start operations.
Norwegian supplies climbed upward Monday as more capacity returned from the Troll Field, where maintenance has limited volumes. Construction on the last stretch of NS2 is likely to run through at least Sept. 12, according to a notice from the German Federal Maritime and Hydrographic Agency. Russian President Vladimir Putin said Friday that there’s roughly nine miles of underwater pipeline left to be completed.
European natural gas prices, which have set records this summer amid low supplies and storage inventories, dropped 11% last week after Gazprom PJSC said the system would be able to move 5.6 billion cubic meters this year. The pipeline running from Russia to Germany would help relieve the continent’s gas shortage.
The fall in European prices last week helped drag down the Japan-Korea Marker (JKM) in Asia, where demand has also remained strong this summer as buyers have had to compete with Europe for supplies. JKM spot prices dipped below $17/MMBtu last week when the Dutch Title Transfer Facility fell on the NS2 news.
The pipeline needs insurance and certification before it can start moving natural gas. Domestic storage inventories are also low in Russia, which could limit available volumes for Europe.
Engie EnergyScan analysts said Monday that “European gas prices could tempt to continue their rebound as the impact of the upcoming start of the NS2 gas pipeline fades,” but they noted that “any rise could be limited, particularly as technical resistances could also exert downward pressure.”
Meanwhile, spot prices in North Asia were assessed in the mid-$15/MMBtu range Monday. While they’ve slipped from recent highs as some price-sensitive buyers in the region have switched to other fuels, hotter weather is on the way over the next 6-10 day period. Higher-than-normal temperatures in Japan could increase power demand.
The same is true in the United States, where the Henry Hub moved higher Monday as forecasts called for above-normal temperatures through the end of August. Prices slipped last week after a cooldown.
With European storage inventories about 20% below the five-year average and restocking demand strong ahead of winter in Asia, American liquefied natural gas (LNG) export terminals are expected to ramp-up volumes this winter to meet increased demand.
Both the Calcasieu Pass export terminal and a sixth train at the Sabine Pass facility recently signaled that they could be up and running by the end of the year. Venture Global LNG Inc. sent an implementation plan to the Federal Energy Regulatory Commission for the hot oil systems at Calcasieu Pass. Cheniere Energy Inc. was also recently granted approval to operate its hot oil system.
Wood Mackenzie analysts said Monday that they expect Train 6 to be liquefying gas by December and fully operational in 1Q2022. The 5 million metric tons/year train would expand capacity at Sabine Pass in Louisiana to 30 mmty.
Wood Mackenzie added that the first block of smaller, modular trains at Calcasieu Pass should be liquefying by the end of November, with all 18 trains online by the end of next year. The 10 mmty facility is under construction in Louisiana.
Nearer-term, the Panama Canal, a preferred route to move goods between the Atlantic and Pacific basins, has announced maintenance from Aug. 29 to Sept. 10 at its Miraflores Locks. The canal was already congested as Asia has ramped its call for LNG and more goods are transiting the globe amid a Covid-19 rebound.
The Panama Canal Authority recommended last week that shippers book transit early to avoid delays that could last “days, if not weeks after completion.”
Elsewhere, Petróleo Brasileiro SA, aka Petrobras, has authorized Excelerate Energy LP to lease the 20 million cubic meter Bahia regasification terminal in Brazil. Excelerate submitted a new bid in July after an earlier proposal was rejected. Excelerate could take control of the terminal by the end of the year if it gains final authorization. Brazil has struggled to import enough natural gas this year amid a drought that’s left its hydropower reservoirs low and power demand high.
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