While the coronavirus-led plunge in crude oil prices has grabbed the bulk of the headlines, the collapse in spot liquefied natural gas (LNG) prices in Asia has been just as dramatic, and just as likely to have lasting consequences.
FILE PHOTO: Liquified natural gas storage tanks are seen at PetroChina's receiving terminal in Dalian, Liaoning province, China July 16, 2018. REUTERS/Aizhu Chen
This may to some extent be comparing apples with oranges, but it does serve to underline that the first casualty of the weakness in LNG will be U.S. exports to Asia. Liquefaction costs around $3 per mmBtu, and the shipping from the U.S. Gulf coast to Asia currently varies from around 60 cents to Japan and 81 cents to China, according to commodity price reporting agency Argus.
Most Australian LNG projects are likely to need a price of around $3 per mmBtu to break even, with the coal seam gas-based ventures in Queensland are believed to need slightly higher prices. Vessel-tracking and port data compiled by Refinitiv show that top importer Japan is expected to offload 5.13 million tonnes of the super-chilled fuel this month, which is the lowest monthly total in records stretching back to January 2013, and down 7.9% from the same month in 2019.
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