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Weekly Summary

LNG: Jul 1-5: Federal court orders to halt Biden administration's freeze on approval for LNG projects

--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery prices moved around $11.95-12.25. Prices fell compared with a week earlier because spot purchases to cover demand for summer in Northeast Asia already nearly finished.

LNG Consultant Toby Copson said, "Prices appear to be high enough to cause demand destruction. Until we see a correction to downside, buyers may temper interest." Despite high temperatures, some end-users in Northeast Asia appeared to hold excess cargoes on hand. While details were unknown, an Asian producer suggested that a utility company in west Japan might have resold a September delivery cargo in late last week of June.

In China, with low domestic prices, the number of buyers that were keen on spot cargoes was limited. Pipeline gas prices and domestic LNG prices by truck in China were seen to be at levels equivalent to less than $10.00/mmBtu and about $11.00/mmBtu, respectively. Another Chinese end-user said, "Under this situation, buying ideas from Chinese players will be at $10.00-11.00." The end-user, however, added, "We are paying attention to the demand situation in South China," since temperatures in the area were forecasted to rise in the coming few weeks.


--FOB Middle East, DES South Asia and the Middle East

While Pakistan recently refrained from procuring spot LNG cargoes, the country seemed to be negotiating resales of long-term cargoes with Qatar. As economic slowdown led to sluggish gas demand in the country, Pakistan was apparently requesting Qatar to approve reselling cargoes although Qatar imposes a strict restriction on destinations for long-term cargoes. Pakistan imports LNG mainly from Qatar that accounted for about 90% of the total import volume of LNG into Pakistan in 2023. A Japanese company commented, "Pakistan is a tough negotiator. Probably, what Pakistan requests will be accepted."


--FOB Atlantic, DES Europe and South America

The U.S. Federal District Court in Louisiana ordered the lifting of the ban on the approval of new LNG projects that the Biden administration has conducted since Jan. In response to the ban, 16 US state plaintiffs, such as Texas, filed a preliminary injunction with the Federal Courts, saying, "the ban is completely without reason," and the court granted the plaintiff's move. Hiroshi Hashimoto, senior specialist at the Institute of Energy Economics, Japan, pointed out, "The next point is how the Biden administration will react to the court's order. If they respect the order, the US Department of Energy (DOE) will need to issue an export permit immediately to the 24.00 mil mt/year US CP2 project, which the U.S. Federal Energy Regulatory Commission (FERC) has already approved."


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