Short-term LNG contracts become more popular amid COVID-19

Oil&Gas Materials 22 December 2020 15:46 (UTC +04:00)
Short-term LNG contracts become more popular amid COVID-19

BAKU, Azerbaijan, Dec.22

By Leman Zeynalova – Trend:

The emergence of the COVID-19 pandemic has impacted the signing of long-term LNG contracts globally, as almost all the long-term contracts reported for 2020 were signed in Q1 2020, Trend reports with reference to GlobalData.

Amid the ongoing pandemic, buyers are more interested in signing short-term contracts as long-term contracts became unattractive due to lower spot prices, the company said.

GlobalData reveals that Total SA has dominated in terms of long-term liquefied natural gas import contract volumes signed by key purchasing companies for the year 2020, with almost 38 percent of global contracted capacity.

Total signed a long-term LNG contracted capacity of 3.2 million tonnes per annum (mtpa) in 2020. BP followed with a share of 22 percent or 2.5 mtpa. Eni Spa also had 18 percent or 1.5 mtpa of the total LNG contracted capacity in the year.

Among seller companies, Kosmos Energy signed the biggest long-term LNG contract for 2020 with BP to supply 2.5 mtpa of LNG for a period of seven years, from 2023 to 2030. The LNG will be supplied from the Tortue Floating I liquefaction terminal in Mauritania.

Nigeria LNG Limited signed the highest long-term LNG contract volumes among seller companies with 4 mtpa or 47 percent of the total volumes in 2020. Energia Costa Azul and Kosmos Energy followed with 2.5 mtpa or 29 percent of the total volumes each, followed by Qatargas Operating Company and Venture Global LNG with 1 mtpa each.

Fitch Solutions believes that after finding bottoms in 2020, global LNG prices are expected to strengthen in 2021 as market conditions improve.

“Asia look set to lead the recovery in prices and demand. LNG flows into Asia’s large LNG markets such as China and India, have generally remained intact in spite of prolonged battles against Covid-19, due to a surge in residential gas use, increases in the demand for personal protective equipment (PPE) that require gas as input and in the case of China, an earlier economic reopening. In contrast, contracted deliveries into Japan and South Korea have suffered meaningful contractions, amid a resurgence in coal and nuclear power, and as demand growth outside of the residential sector slumped to new lows. LNG flows into both markets could find some seasonal support over the coming months, as the effects of La Nina bring a colder winter across the northern hemisphere markets, driving stronger demand for heating gas,” reads a report released by the company.


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