According to Official Statistics of Japan, imports of liquefied natural gas (LNG) rose by 12 percent from 2010 to 2011 and 11 percent from 2011 to 2012. The March 11, 2011 Tohoku earthquake, accompanying tsunami and subsequent nuclear plant outages, have led to higher use of thermal generation, including natural gas fired generation. According to the Federation of Electric Power Companies of Japan, LNG consumed for power generation grew 27 percent from fiscal year (April to March) 2010 to fiscal year 2011. Total LNG imports over the same period grew by a smaller percentage (18 percent) as the destruction from the earthquake limited natural gas demand outside the power sector.
Based on data from Official Statistics of Japan, from 2010 to 2011, the average price for LNG imported to Japan grew 35 percent from US$10.92 per million British thermal units (MMBtu) to US$14.78 per MMBtu. The average import price grew again in 2012, to US$16.62 per MMBtu, or 12 percent over the 2011 average. Most LNG imported to Japan is imported under long-term contracts with the LNG prices explicitly linked to the price of crude oil. However, in order to increase imports since the earthquake, Japanese companies have had to buy more LNG under short-term or spot arrangements, with the prices negotiated between buyers and sellers.
Natural gas prices rose at most locations, particularly in the Northeast United States. The Henry Hub price rose 8 cents per MMBtu from $3.49 per MMBtu to $3.57 per MMBtu. On Tuesday, at $3.63 per MMBtu, the Henry Hub price was at its highest level since November 28. The general increase in prices was likely the result of a week of winter storms and expectations for frigid weather. While areas in the Midwest received plenty of snow, snowfall was expected to be considerably less in New York and New England.
While New York and New England prices rose, they did not reach the same peaks they reached earlier this year. Already comparatively elevated at $7.76 per MMBtu at the beginning of the report week, the price at the Algonquin Citygate (which serves Boston consumers) dropped in the middle of the week to just under $5 per MMBtu, and rose back to end the week at $7.77 per MMBtu. At Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City, prices rose from $3.85 per MMBtu last Wednesday to $4.66 per MMBtu yesterday. In contrast to this report week, in January 2013 prices at both of these trading points spiked to more than $30 per MMBtu during a cold snap.