TOKYO: Japan’s LNG import price over July-December is expected to average $6.60/MMBtu CIF, compared with $6/MMBtu in January-May this year, and will likely rise to $7.40/MMBtu for calendar year 2017 on the back of higher crude oil prices, the Institute of Energy Economics, Japan said Monday.
“There is a possibility that the gap between long-term LNG price and spot price will widen as we expect LNG spot price to remain depressed and to trade around $5/MMBtu with more supply to be added to the market,” IEEJ said in a report. IEEJ projects Brent, WTI and Dubai crude oil prices to be at $50/b, $49/b and $47/b respectively in July-December this year. For 2017, Brent, WTI and Dubai crude oil prices are expected to rise to $55/b, $54/b and $52/b, respectively.
Japan’s LNG imports are expected to come in at 82.2 million mt for fiscal year 2016-17 (April-March), down 6.2% year on year, and fall further to 70.9 million mt in fiscal year 2017-18, according to IEEJ. The estimates are based on the assumption that seven nuclear reactors will restart by March 2017, and another 12 reactors to restart in the next fiscal year starting April 2017, bringing to total 19 nuclear reactors up and running by the end of March 2018.
Japan’s coal demand meanwhile, is projected to inch up just 0.1% from a year ago to 190.2 million mt in fiscal year 2016-17, and is expected to remain largely the same at 190.1 million mt in the following fiscal year, according to IEEJ. IEEJ said globally, a total 74 million mt/year of LNG liquefaction capacity — mainly from the US and Australia — will be added in calendar year 2016 and 2017. Some of the new projects may delay or may whittle down output as the market is likely to remain oversupplied.
