Winter LNG Prices Could Spike Amid Political and Market Risk: Tokyo Gas

LNG prices could spike this winter even with high storage levels in Europe due to political and market uncertainties according to Tokyo Gas.

• "There are still many uncertainties, including the situation in Russia and Ukraine, sanctions against Russia by the G7, the status of pipeline and LNG exports from Russia to Europe, the recovery trend in China's LNG demand and supply concerns," said Atsunori Takeuchi, senior general manager of the LNG Business Department.
• Japan's LNG demand is set to continue declining over the long term with increasing renewable energy in the mix although the speed of decline will be "greatly affected" by trends in other fuels and innovation.
• Japanese buyers could find it more difficult to sign traditional, long-term LNG contracts with future demand uncertainty due to market volatility and the switch to low carbon energy sources. "From this perspective, we believe contract flexibility is more important than ever," Takeuchi said.
• Eliminating destination clauses will improve market liquidity, enable supply-demand adjustments in the event of an emergency, and contribute to supply stability.