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Signed LNG Term Contract Volumes Increased in 2022

LNG
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A total of 52 LNG sales and purchase agreements with tenures of 10 years or longer totalling more than 65m mt, were signed in 2022 up from 41.3m mt in 2021 according to S&P Global.

  • Appetite for term contracts is expected to continue into 2023 with several regasification terminals in Europe coming online in the next couple of years and up to 23m mt of existing contract expected to expire this year.
  • High market volatility in 2022 has made it increasingly difficult to price the crude oil slope in term contracts. The relationship between LNG prices and the crude oil slopes, degree of oil indexation, has become a moving target according to S&P Global sources. Counterparties are trying to balance the high historical level and downside LNG risks with the potential for future higher prices.
  • Purely Brent crude oil-linked term contracts fell to just 8.7% of signed contracts in 2022 compared to 38% in 2021 according to IHS Connect with a growing disconnect between oil prices and LNG prices.
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A total of 52 LNG sales and purchase agreements with tenures of 10 years or longer totalling more than 65m mt, were signed in 2022 up from 41.3m mt in 2021 according to S&P Global.

  • Appetite for term contracts is expected to continue into 2023 with several regasification terminals in Europe coming online in the next couple of years and up to 23m mt of existing contract expected to expire this year.
  • High market volatility in 2022 has made it increasingly difficult to price the crude oil slope in term contracts. The relationship between LNG prices and the crude oil slopes, degree of oil indexation, has become a moving target according to S&P Global sources. Counterparties are trying to balance the high historical level and downside LNG risks with the potential for future higher prices.
  • Purely Brent crude oil-linked term contracts fell to just 8.7% of signed contracts in 2022 compared to 38% in 2021 according to IHS Connect with a growing disconnect between oil prices and LNG prices.