Analyzing trends in the Asia Pacific

July 18, 2023
oil, gas, and LNG

This article was originally published in LNG Industry Magazine.

Spot LNG prices in Asia, as indicated by the Platts JKM Price Assessment,1 had already begun to increase during 2021. This was in part a result of a cold northern hemisphere winter in 2020/2021,2 resulting in gas storage levels below average across the Asia Pacific region going into the winter of 2021/2022.3 Prices in Europe were also increasing,4 in part due to a reduction of pipeline imports from Russia (even before the Ukraine War5) and other factors, such as weaker wind power.6 The Ukraine War and subsequent further reductions in Russian pipeline gas flowing to Europe significantly exacerbated this situation. Historically, Europe (with the exception of Iberia) acted in part as a balancing market for global LNG, with spot cargos sailing to Europe when the netback price spread vs Asia was positive. This significantly higher European LNG demand has temporarily shifted the balance of LNG importers globally, with substantial impacts on the Asia Pacific region. These impacts are likely to continue manifesting in the short and medium term.

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