A Time Series Analysis on LNG
Things to think about:
- Winter Weather in North-East Asian. For example, if it is a mild winter then some companies will try and offload a LNG tanker onto the spot market. For example Tohoku Electric did this last year in about march. If there is a super cold winter then this will make spot higher since there will be more need to buy gas.
- The type of contracts in place. In (1) above they can only do this if the contract allows them to onsell the LNG tanker. Historically there were clauses which said it couldn't be done. But recently contracts have been negotiated where the offtaker does not need to have it delivered to their destination but can sell it where they want.
- I guess a recent development is the European LNG buying market. This is becoming very large. While I haven't studied the dynamics in detail, you may have noticed that the carbon price has gone very high in the European markets, this has lead to more LNG buyers since LNG when burnt to make electricity makes much less CO2 than coal, so there is a demand for LNG. I am thinking this dynamic puts some sort of upward pressure on LNG, but it also puts some sort of upper limit on the price since the European buyers will not buy at any price as they will just switch back to coal.
- Chinese coal and gas policies. I think this will become bigger. China about 2 years ago mandated less coal for heating, so this means more gas required, so this pushes up prices
- Japanese nuclear restarts. As more nuclear comes on line in Japan post fukushima there will be less demand in China.
- USA Shale, once it is worked out how to export all this gas on excess gas in the USA it will make a big difference. But we are not there yet. If you are wanting to run some sort of model to predict LNG prices, it is a tough thing to do. I don't think you can just grab a data set and predict from that one set - There are lots of fundamental changes going on.
In Japan:
Tokyo: Otemachi -() Tohoku: Use Sendai and/or (Akita or Aomori) Kansai: Osaka and Kyoto -() Nagoya: Nagoya -(*) Shikoku: Matsuyama Hokuriku : Kanazawa Hokkaido: Sapporo
most weight on (*) ones as they are major load areas.
Korea: Seoul Pussan
China: Bejing Shenyang (Gas pipelines don't go as far as Harbin as far as I know -- Harbin is a massive city in the North, but cut off from the gas pipelines coming from the south) Shanghai