China’s state-owned buyers have increase imports from Nigeria’s LNG (NLNG) as the price of LNG continues to decline amid volatility in the price of global crude oil. China has already imported six cargoes from Nigeria in January 2015, according to Platts’ ship-tracking software cFlow Wednesday.
China imported two cargoes from Nigeria in the period of January-February 2014 and seven cargoes for the year as a whole — all in the first seven months, according to Platts.
Demand for LNG in Asia has been soft due to mild weather this winter, contributing to the slide in prices. 75 percent of global LNG demand is in Asia with the bulk of the cargoes going to Japan, followed by South Korea and then China, India and Taiwan.
Prices also dropped in the summer of last year, as new supply from ExxonMobil’s Papua New Guinea (PNG LNG) project hit the market.
LNG is liquefied natural gas, cooled to a temperature of -260° F, for the purpose of compression and transportation. International shipments of LNG by container ships are generally price-indexed to crude oil, meaning that falling oil prices have led to a comparable drop in LNG prices.
In the period of January to February 2014, the Natural gas balancing to Japan-Korea market (NBP-JKM) spread averaged $7.382/MMBtu versus $1.676/MMBtu in the same delivery months in 2015.
Lower demand from Asia contributed to the crash in LNG spot prices last year by about 50 percent, according to a recent report by Wood Mackenzie.
According to an undisclosed source, most of the deliveries were heard to be part of long-term supply deals between China’s state-owned buyers and portfolio sellers. State-owned PetroChina received a Nigerian cargo aboard the LNG carrier Solaris at its Rudong terminal in China’s eastern Jiangsu province on Wednesday.
The source also said the cargo was likely a spot delivery by Shell, which currently controls the vessel and has no known long-term contracts with the buyer.
PetroChina was heard to have secured a spot cargo in H2 December for delivery in late January or early February in the mid-to-high $9s/MMBtu, but it was unclear at the time whether Shell was the seller. It also received another NLNG-sourced cargo aboard the Neo Energy to its Tangshan terminal in China’s northern Hebei province on January 15.
The Maran Gas Coronis delivered the cargo to CNNOC’s Tianjin FSRU on Wednesday, Platts’ data showed.
Previous NLNG deliveries to CNOOC include cargoes aboard LNG River Orashi to Shanghai LNG on February 2, the LNG Adamawa to Shanghai LNG on January 25 and the Gaslog Santiago to Tianjin FSRU on January 10.
Giles Farrer, Principal Analyst, Wood Mackenzie, said global LNG production was up five million metric tonnes per annum (mmtpa) to 246mmtpa and overall trade was boosted by higher levels of re-exports.
“But the big surprise was that Asian LNG demand was much lower than expected. Demand in emerging markets, like China, failed to grow to the extent anticipated and demand in the established South Korean market fell considerably,” he said.
Nigeria exported its first cargo in October 1999 through the Bonny Island plant of the Nigeria LNG Limited, the company has since shipped over 3,000 cargoes to its customers in Europe, America and Asia, converting over four trillion Cubic Feet (tcf) of associated gas to LNG and Natural Gas Liquids (NGLs) for both export and domestic uses.
The LNG produced from NLNG’s six trains had accounted for about 10 percent of the global LNG market and this growth between 1996 and 2008 earned NLNG the record as the fastest-growing LNG project in the world.
To strengthen her global market share and possibly occupy the second largest LNG exporter after Qatar, the country had targeted to build Olokola LNG and Brass LNG projects, as well as additional Train 7 in NLNG.