LNG-Netback

Forward LNG Netbacks & Implied Cargo Cancellations

The global economy is in the midst of the worst downturn since the
1930s. Modest recoveries are expected in the second half. For
the calendar year 2020, most agencies projecting real global GDP to fall 5.5%. Natural Gas Henry Hub prices have collapsed to $1.60/MMBtu with oversupply market and growing storage inventory beginning to restrain gas producers. With HH price at a historical low, forward LNG netback is falling below $0/MMBtu.

What is LNG Netback?

Forward LNG netback is an export differentiate price between the cost of natural gas and LNG gasification and export price. Forward netback is forward months price parity using both forward curves and expected contractual processing cost.

LNG contracting parties like suppliers, processors, and buyers use netback prices to make trading decisions.

Before Coronavirus, the pre-COVID netback prices for TTF and JKM are within the range of $1/MMBtu to $2/MMBtu, providing gas suppliers with strong financial incentives to export natural gas. However, with COVID 2020, summer has pushed both forward netback TTF and JKM to below $0/MMBtu into as low as negative $1/MMBtu.

LNG Negative Pricing

With negative netback prices, cargo cancellations are on the rise, and as many as 30 cargos are reported to have canceled in June 2020 alone. Market analysts expect more cargos to as high as 45 per month to be canceled from July to Sept 2020, making 2020 the year for the most prolonged negative netback period for LNG market.

More cancellations might still be possible extending to Q4 2020 and Q1 2021, depending on economic recovery, Coronavirus, and weather. We will keep the blog updated as we get more market data.

LNG Software & Technology

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LNG Netback Software

For an uncertain market, gas producers and import LNG buyers can leverage technology to discover that negative pricing using EnHelix optimization software. EnHelix big data and predictive analytics take all LNG supplies and risk factors into optimization modeling, giving traders the tools they need to identify price and cargo cancellation risks.

For LNG price optimization software is easy to use. With historical prices and supply data sources, EnHelix software can compute and optimize expected margins and allocation using AI and traditional models. The software is flexible, with many customized features readily available for unique LNG business needs.

EnHelix LNG software is used by major gas producers and LNG buyers worldwide for LNG contracts, scheduling, optimization, logistics, risk management, and settlements.

What is Forward LNG Netback?

Forward LNG netback is an export differentiate price between the cost of natural gas and LNG gasification and export price. Forward netback is forward months price parity using both forward curves and expected contractual processing cost. LNG-Netback

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