LNG volumes, on average, traveled around 60 percent further in 2012 than in 1993
Growing average distances travelled by liquefied natural gas (LNG) volumes reflect structural changes in LNG markets. Over time, LNG has become more of a global commodity. In 1993, around 70 percent of total global LNG trade moved from an Asia-Pacific exporter to an Asia-Pacific importer, a relatively short journey. Early data for 2012, shows that this intra Asia-Pacific trade fell to under a third of total global LNG trade. As LNG trade has become more diverse and disperse, the average distance travelled by a billion cubic feet (Bcf) of LNG (a Bcf of gaseous natural gas, converted into LNG) has increased.
Growing LNG shipping distances also reflect the growth of LNG exports from the Middle East. Long-time Middle East exporters, Oman and Abu Dhabi in the United Arab Emirates, have sent and continue to send most of their gas to Asia-Pacific customers, a relatively long journey. However, Qatar, which started exporting LNG in 1997, has accounted for more than three-quarters of the growth of current Middle East exports over 1993 levels, and Qatar has a more diverse customer base, including relatively nearby customers in Europe and India. Although this has helped moderate growth in the average distance travelled by a Bcf of LNG exported from the Middle East, currently more than a third of Qatari LNG and around half of Middle East LNG still makes the long journey to Asia-Pacific customers. Thus as Middle East LNG exports have grown, so too has the average distance traveled by a Bcf of LNG exported globally.
To a lesser extent, growing average global distances reflect growing, but still relatively small, volumes of LNG that travel unusually long distances (more than 9000 nautical miles or more than twice the 2012 global average). These trades generally reflect spot or short-term purchases, not long-term contracts. In 2007 and 2012, LNG imports to Japan accounted for more than half of all LNG travelling such long-distances. This occurred as Japan reached out further from its shores to pull in extra LNG to make up for nuclear shutdowns in the wake of the 2007 Chuetsu earthquake and the 2011 Tohoku earthquake and tsunami.
Nymex futures prices as well as spot prices across the country declined for the report week. The Henry Hub price declined by $0.44 per MMBtu over the report week to close at $3.86 per MMBtu yesterday. Most of this decline occurred during trading on Friday, when prices closed $0.31 per MMBtu lower than the prior day’s close. The Henry Hub price continued this downward trend with small daily declines through the remainder of the report week. Most other major trading hubs also saw similar price declines of around $0.40 per MMBtu. The near-month Nymex price fell by $0.348 per MMBtu over the report period, from $4.326 per MMBtu last Wednesday to $3.978 per MMBtu yesterday. The 12-Month Strip (the average of June 2013 to May 2014 contracts) experienced a slightly smaller week-on-week decline, decreasing by $0.286 per MMBtu and ending the week at $4.173 per MMBtu.