Atlantic spot liquefied natural gas (LNG) freight rates rose this week, while European and Asian prices also increased compared to the previous week, reports LNG Prime.
Steam vessels “not making any money”
Flex LNG’s CEO Øystein Kalleklev said during the company’s first-quarter conference call on Thursday that a “lot of ships” are scheduled for delivery in 2024 and 2025, while the new LNG volumes to the market are coming at the end of 2025 and into 2026 and onwards.
He said there are currently “numerous” ships in the “weak” spot market.
Looking at rates today, with spot rates for modern tonnage at around $50,000, he said that this means the “steamships are making rates in the low $20,000, which means that when you take in the cost of docking these ships, these are costly ships to dock because they are old.”
So that together with a lot of ships coming off long-term contracts would result in more steam ships being scrapped in the coming years.
Yearly high for NWE LNG prices
In Europe, the SparkNWE DES LNG front month increased compared to the last week.
He said this is a $1.552/MMBtu increase in DES LNG price, the largest week-on-week increase since October 2023.
European prices rose this week following an announcement by Austria’s OMV indicating a potential disruption in gas supplies from Russia’s Gazprom to Austria due to a court ruling.
OMV said it would “still be able to supply its contractual customers with gas from alternative, non-Russian sources, through its extensive diversification efforts over the last several years.”
This includes long-term LNG supply contracts, which are imported into Europe via OMV’s LNG regasification capacities at the Gate terminal in Rotterdam.
Data by Gas Infrastructure Europe (GIE) shows that volumes in gas storage in the EU continued to rise and were 67.72 percent full on May 22.
Gas storages were 66.06 percent full on May 15, and 66.34 percent full on May 22 last year.
JKM above $12/MMBtu for first time since December 2023
In Asia, JKM, the price for LNG cargoes delivered to Northeast Asia, for July settled at $12.255/MMBtu on Thursday, rising from the previous week.
The data shows that this is the first time that the JKM rose above $12/MMBtu since December last year.
JKM for July settled at 11.160/MMBtu on Friday last week, rising from the previous week.
State-run Japan Organization for Metals and Energy Security (JOGMEC) said in a report earlier this week that JKM rose in the latter half of the last week due to the shift in delivery months from June to July, as well as supply concerns caused by troubles at Gorgon LNG, Bintulu LNG, and Nigeria LNG.
Spot LNG prices also rose due to heatwaves in Southeast Asia and South Asia, and demand for summer season.
Bintulu LNG back online
US LNG exports dropped to 23 shipments in the week ending May 22 compared to 28 shipments in the prior week, with the Freeport LNG terminal shipping five cargoes during the period, according to the EIA.
Freeport LNG, the operator of the 15 mtpa liquefaction plant in Texas, told LNG Prime on Wednesday last week it has resumed operations at all of its three liquefaction trains.
Malaysian energy giant Petronas also said this week it has resumed full operations on May 19 at its giant Bintulu LNG plant.
The state-owned firm announced on May 14 that its unit MLNG experienced a power loss on May 10 at the LNG complex with a capacity of almost 30 mtpa.
In Australia, one of the three trains at Chevron’s Gorgon LNG terminal in Western Australia remains offline.
Chevron Australia, a unit of US energy giant Chevron, said on May 3 that it was working to resume full production from its Gorgon LNG terminal following a “mechanical fault” that is affecting one LNG production train.
The fault occurred on April 30 in a turbine and the 5.2 mtpa production train is likely to be offline for at least five weeks.
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Source: LNG Prime
