The latest Platts Japan/Korea Marker place February-delivered LNG prices to Asia at an average of $9.11/MMBtu – with this measure reflecting prices struck between December 16 and January 15.
“The February JKM average registered a 47.3% year over year drop, the largest on record since Platts began assessing the JKM in February 2009,” Platts said.
“The JKM reached levels not seen since February 2011, when it averaged $9.854/MMBtu.”
Platts Asia LNG managing editor Stephanie Wilson said the JKM had dropped to levels not seen since the energy shortage-triggering Fukushima nuclear disaster occurred in Japan.
“This is due to a relatively mild winter across much of the northern hemisphere; reduced power consumption from various industrial users in northeast Asia; and users switching fuels, as commodity prices across the board have fallen,” she said.
According to the Australian Financial Review, New York-based Energy Intelligence’s World Gas Intelligence publication reported that spot LNG prices were at $9.60/MMBtu last week, eclipsing the previous low of $9.95/MMBtu set on January 17, 2011.
“Tokyo Electric Power Co and Chubu Electric are targeting a purchase price of $US7 to $US8 per million British thermal units for their joint six-cargo spot tender to buy supply, even as Australia and Nigeria are selling a combined 10 shipments,” the newspaper reported.
Holmwood Consulting managing director Leigh Bolton reportedly said lower oil prices will certainly result in below $10/MMBtu spot LNG and long term LNG prices from the March quarter to the end of 2015.
He based this on oil-priced LNG contract formulas which “lock in” about six months behind oil price movements.
Bolton said TEPCO and Chubu, Japan’s largest buyers of LNG, “should sit tight at $US7 to $US8 as the market is going to come to them pretty quickly”
Meanwhile, in the first week of January i>Bloomberg reported that long term LNG will sell under $10/MMBtu if Brent crude prices trade below $66 a barrel – with Brent prices below $50/bbl this week so far.
Some commentators believe that low LNG prices might lead some Australian LNG operations to sell uncontracted gas back to the domestic market.
