An economic report showed that after the unprecedented and historic rises in natural gas prices that it witnessed during the first nine months of 2022, which was like a race between the Asian market and its European counterpart for leadership in raising prices, and then the subsequent decline in prices late last year, prices continued to decline. Significant decline in the first quarter of this year.
The report on the developments of liquefied natural gas and hydrogen issued by the Organization of Arab Petroleum Exporting Countries (OAPEC) said that the price declines were driven by mild winter conditions in Europe and Asia that contributed to reducing the demand for natural gas, in addition to dispelling fears of the possibility of a shortage in gas supplies during the summer. Winter thanks to high gas stocks in Europe.
Low average prices in the European market
The report indicated that in the European market, average natural gas prices declined, according to the TTF Center in the Netherlands, during the first quarter of this year by about 42%, compared to the previous quarter, recording 16.8 dollars per million British thermal units, which are the levels that prevailed before the Russian-Ukrainian crisis that took place. It was launched in February 2022, due to warm winter conditions compared to previous years and high levels of gas reserves, which reached about 55% by the end of March.
He pointed out that in the Asian market, spot prices declined in the Northeast Asian market (the index of spot LNG shipments for the Asia region), similar to the European market during the first quarter of 2023, to record $18.1 per million British thermal units, compared to about $31 per million British thermal units. over the previous quarter (down 42%).
In North America, natural gas prices continued to decline, according to the Henry Center in the United States of America, during the first quarter of 2023, as the average amounted to about $2.65 / million British thermal units, compared to $5.55 / million British thermal units during the previous quarter (a decline of 100 percent). 52.3%
Relatively warm winter conditions, high gas stocks and growing domestic gas production in the United States led to an increase in supply and then pressure on prices.
The report said that with regard to the prices of liquefied natural gas shipments in long-term agreements linked to the price of American Brent crude (the price formula is based on a factor of 12-13% of the price of Brent crude per million British thermal units, according to the terms of the contract), it recorded during the first quarter of 2023 an average $14.5 per million British Thermal Units compared to $14.9 in the previous quarter, coming close to spot prices.
According to the report, this came in light of the decline in prices in spot markets in Europe and Asia, but in general they are more stable compared to spot prices thanks to the stability witnessed by Brent crude prices.
A wave of investments in gas projects
The report stated that the year 2022 witnessed a return to the wave of final investment decision-making in liquefied natural gas projects, benefiting from the international interest in energy security issues due to the Russian-Ukrainian crisis and the unprecedented historical rises in gas prices.
And last year concluded by making the final investment decision to implement 4 projects distributed between the United States, two projects, and the Congo, two projects, with a total design capacity of 26.3 million tons / year.
The report said: With the advent of the year 2023, and in light of the positive expectations for the growth of demand for liquefied natural gas during the coming period and the endeavor of many markets to conclude long-term contracts to secure their needs of liquefied natural gas to achieve their energy security, a new wave of investment decision-making has begun to affect several projects. Suggested in the USA.
The total designed capacity in which the final investment decision was taken until the end of the first quarter of this year is 20.66 million tons/year, all of which are in the United States of America.
