East China LNG bunker prices more competitive after new barge addition: sources

LNG bunker prices in East China have become more competitive following the addition of an LNG bunker barge by Shanghai SIPG Energy Service in the second half of 2024, market sources said recently.

LNG bunker prices in East China, primarily in Shanghai and Ningbo, were higher than in Singapore in the first half of 2024 due to increased costs.

However, with the rise in local barge availability in the second half of the year, spot prices for LNG bunkering in East China have occasionally fallen below those in Singapore, the Asian bunkering hub, market sources said, adding that term contract prices for LNG bunkering in East China have also declined, now being lower than those in Singapore.

The Platts-assessed East China-delivered LNG bunker averaged $14.375/MMBtu in 2024, at a premium of 10.1 cents/MMBtu compared with Singapore's price of $14.274/MMBtu, S&P Global Commodity Insights data showed.

The East China-delivered LNG bunker averaged $16.096/MMBtu over Jan. 2-23, at parity with Singapore's price, the data showed.

Platts assessed both Singapore and East China LNG bunker prices at $15.865/MMBtu on Jan. 23, at a premium of $1.8/MMBtu to the Asian LNG benchmark JKM, according to the data.

SSES' new LNG bunker barge

Shanghai SIPG Energy Service (SSES), a joint venture between Shanghai International Port Group (SIPG) and Shenergy Group, added one LNG bunker barge to its existing fleet in 2024, which helped increase barge availability and lower prices, according to market sources.

SSES has chartered a newly built LNG bunkering ship, the Huaihe Energy Sailing, from Anhui provincial government-owned Huaihe Energy Holding Group, effective Aug. 1, 2024, local media reported.

The new LNG bunker barge, with a capacity of 14,000 cu m, was designed and built by Hudong-Zhonghua Shipbuilding, a subsidiary of the state-owned China State Shipbuilding Corp.

Prior to this, SSES operated a single LNG bunkering ship, the Hai Gang Wei Lai, which began its bunkering operations in March 2022. The 20,000 cu m ship was acquired from the UK-based LNG company Avenir LNG and was originally named Avenir Allegiance.

SSES primarily operates in the LNG bunkering business at Yangshan Port in Shanghai, which is currently the largest LNG bunkering port in China.

The port completed LNG bunkering for 76 ships in 2024, up 73% year over year, with a total volume of 444,000 cu m, making it the third-largest LNG bunkering port globally, the Shanghai Port Service Office said on its social media platform Jan. 8.

"Now that SSES has added one more LNG bunker barge, it should be looking for orders to operate the barge efficiently," a North Asia-based LNG bunker buyer said.

Ample supply pressures China's LNG bunker prices

Ample LNG supply in China is also weighing on bunker prices, as the bunker market offers a better outlet for LNG, a market source said.

"Chinese prices are lower than Singapore's due to ample LNG cargoes. China is active in the bunkering market so it can absorb the excess LNG lengths. There is high availability but limited usage now due to high pipeline gas supply and a gloomy economy," the source said.

LNG can be sold to the domestic market, but domestic prices have been lower than LNG import costs, meaning LNG importers incur losses if they sell LNG locally.

However, LNG bunker prices in China still command premiums to JKM, which is the delivered price to Japan, South Korea, Taiwan and China, according to market sources.

In 2024, China imported around 76.65 million mt of LNG, up 7.5%, or 5.33 million mt, year over year, marking a continued recovery from 2023 after a sharp decline in 2022, the latest data from the General Administration of Customs showed.

Meanwhile, the Eastern Russia-China Natural Gas Pipeline, built to transport Russian natural gas to China, became fully operational in December 2024.

Gas supplier Gazprom expects Russia's pipeline gas deliveries to China to reach 30 Bcm in 2024 and to hit the design capacity of 38 Bcm (26 million mt of LNG equivalent) in 2025.

At the same time, Chinese importers are reselling LNG cargoes for March and summer deliveries to minimize potential losses from downstream sales, which have been hampered by weak domestic demand, while also alleviating pressure on elevated inventory levels, Commodity Insights reported earlier.