Gas
Asia Spot LNG Prices Surge Slightly Amid US-China Tariff Truce
Asia spot LNG prices surged in Week 20 amid a slight uptick in industrial sentiment, which supported demand.
The surge in Asia’s LNG Prices occurred following a 90-day tariff truce that the United States and China agreed upon during trade talks in Geneva, Switzerland.
The US and China reached a deal on May 12 to cut import tariffs on each other’s goods for 90 days, starting from May 14.
As such, the US agreed to lower its tariffs from 145% to 30%, while China’s retaliatory tariffs dropped from 125% to 10%.
Asian Spot LNG Prices
The average LNG price for July delivery into North-East Asia topped $11.75 per million British thermal units (MMBTU), up from $11.50/MMBTU recorded in Week 19.
The 90-day tariff truce has boosted industrial optimism across Asian energy markets. This détente has benefited the industries of China, Vietnam, Taiwan, India, Japan, and South Korea.
These countries’ industrial sectors depend on gas for power generation to supply electricity to their various industrial plants. They also rely on gas as a feedstock, especially for their petrochemical plants.
China’s LNG Strategy
Despite the slight surge in Asian LNG prices, China’s 25% tariff on US LNG remains in place, making US LNG expensive.
Consequently, Chinese buyers like CNOOC and Sinopec are reselling LNG cargoes from the United States to other countries in Asia and Europe, where demand remains robust.
Nevertheless, China continues to diversify its LNG sources away from the United States, with increased engagement with Russia and the UAE.
European Market Dynamics
In Europe, gas prices at the Dutch TTF hub remain range-bound between €34 and €35 per megawatt hour. Weaker demand amid warmer weather supports TTF prices. Europe remains a key destination for re-routed LNG cargoes from the United States. Primary European destinations include Spain, the Netherlands, France, and the UK.
Freight Rates
Regarding freight rates, while the Atlantic rates have declined sharply, Pacific rates have held steady.
Atlantic rates showed their largest week-on-week drop since January. On May 16, they were assessed at $32,500/day, while Pacific rates remained relatively stable at $22,250/day.
Arbitrage opportunities currently favour Asia through the Panama Canal. The Panama Canal remains a critical chokepoint for US Gulf Coast LNG heading to Asia.
However, the Cape of Good Hope route favours Europe. Due to the Red Sea Crisis, several LNG shippers are opting for longer routes around the Cape of Good Hope, which adds time and cost.
Impact of US-China Tariff Truce on LNG Trade
The 90-day tariff truce agreed between the United States and China on May 12 has temporarily eased trade tensions between the two largest economies. However, its impact on LNG trade remains limited.
Despite the tariff reductions, US tariffs on Chinese goods dropping from 145% to 30% and China’s tariffs on US goods falling from 125% to 10%, the 90-day period is insufficient for China to resume imports of US LNG.
China’s 25% on US LNG remains in place despite the tariff reduction agreed during trade talks. As a result, Chinese buyers, restrained by the 25% tariffs, are reexporting US LNG to Asian and European markets.
This strategy enables Chinese buyers to avoid the financial burden of tariffs. In addition, Asian and European countries that need LNG receive supplies to meet their energy demand.
The Kwale Gas Gathering (KGG) plant plans to undergo expansion to reach 600 million standard cubic feet daily. KGG facility was designed to process stranded gas resources in OML56.
Kwale Gas Gathering Current Operations and Strategic Importance
- Current Capacity: The KGG facility boasts a processing capacity of 300 million standard cubic feet per day of natural gas.
- Location: Umusam community, near Kwale, Delta State
- Developers: Nedogas Development Company Limited, a Joint Venture between Xenergi Limited and the Nigerian Content Development and Monitoring Board.
Commissioned on June 6, 2024, the KGG facility serves as a hub for gathering, compressing, injecting, and metering natural gas from various fields in OML 56. Thus, KGG facilitates the monetization of stranded gas resources.
Additionally, the KGG hub will connect to the 48-inch OB-3 gas trunk line. NNPC owns and operate the trunk line.
The facility began operations with an initial gas injection capacity of roughly 50 MMscfd. This comprises 20 MMscfd from the Nedogas Plant and an additional 30 MMscfd from the Matsogo field, operated by Chorus Energy Limited.
Economic Benefit
The KGG facility is projected to contribute over $240 million per annum to Nigeria’s GDP within the next four years.
This contribution will occur through trunk line tariffs, gas sales to off-takers, and other infrastructure tariffs and tolling revenues generated by the network and trunk line operators.
Additionally, it will contribute to the development of the Delta State Economic Zone.
The KGG facility aligns with the federal government’s “Decade of Gas“ initiative. The Decade of Initiative aims to increase gas production and utilization nationwide for power generation and as a feedstock for industries.
Plans are underway to expand the KGG facility’s capacity to 600 million scf/d in the second phase. The aim is to accommodate the increasing gas volumes from nearby fields.
First Hydrocarbon Nigeria (FHN), Pillar Oil, and Midwestern Oil & Gas operate these fields.
Gas prices surged in the US and the UK, but held steady in Continental Europe on May 27, 2025, amid growing concerns over supply disruptions.
Prices remain after unplanned capacity cuts were announced at Norway’s massive Troll gas field due to external power issues, compounding ongoing maintenance at other key sites like Nyhamna and Aasta Hansteen.
Norway is under pressure to maintain stable flows as Europe scrambles to refill gas storage, currently at just 45%.
The US natural gas price closed at roughly $3.753/MMBtu on May 27, compared with 3.667/MMBtu recorded on May 27.
UK natural gas futures topped to 88.46 pence per therm up from 87.15 recorded on May 26.
European natural gas futures topped €37.00/MWh on May 27, down from €37.25/MWh recorded on May 26.
Read: Natural Gas Prices May 26, 2025: US, UK & Europe
Major Natural Gas Price Benchmarks
Region | Benchmark | Key Features |
United States | Henry Hub (NYMEX) | Reflects supply/demand in North America Tied to US shale gas production & pipeline infrastructure dynamics |
Europe | TTF (Netherlands) | Europe's leading gas benchmark Reflects LNG and pipeline flows from Russia, Norway, and LNG imports |
Asia | JKM (Japan-Korea LNG) | Reflects Asian demand, LNG deliveries to Japan & South Korea |
United Kingdom | NBP (National Balance Point) | Linked to European gas markets Influenced by LNG & North Sea supply Futures |
Other benchmarks include
- Oil-Linked Pricing: Some long-term contracts ( Russia’s Gazprom pipeline gas exports) still use oil-indexed pricing. Gazprom has long preferred long-term contracts and hybrid pricing with spot elements to hedge against price volatility.
- AECO Canada: It is Canada’s benchmark linked to Western Canada’s pipeline gas supply
Key Factors Influencing Natural Gas Prices
Several supply and demand factors influence natural gas prices. Below is a detailed breakdown of key aspects affecting natural gas prices:
Supply Factors
- Production Levels: Qatar, Russia, and US shale gas production heavily influence global supply. Thanks to fracking technology, the US is already the world’s top natural gas producer. Thus, higher gas production by these countries can push prices down due to oversupply.
- Storage Inventories: Natural gas is stored in underground facilities. Thus, high storage levels generally lead to lower prices. At the same time, low storage levels signal scarcity, leading to price surges.
- Imports/Exports: Fluctuations in gas exports via pipelines or LNG from key producers can significantly affect regional prices. For instance, European gas prices soared by 30% in September 2022 following the indefinite shutdown of Russia’s Nord Stream 1 pipeline. The pipeline, which runs under the Baltic Sea to Germany, historically supplied between 50 – 55 BCM/year of gas to Europe. Likewise, rising liquefied natural gas (LNG) exports by Qatar, Australia, and the US can lead to oversupply and lower prices.
Demand
- Electricity Sector Competition: Countries rely on various sources for power generation, including natural gas, nuclear power, coal, and renewable energy like wind and solar. Suppose the prices of coal and renewables increase. In such developments, electricity producers will shift to natural gas. Conversely, if coal or renewable sources become cheaper, demand for gas will fall, resulting in lower gas prices.
- Weather conditions: Weather plays a significant role in influencing natural gas prices. During the summer, there is a massive surge in the demand, especially in Europe & North America, for air conditioning systems. The high demand for electricity to cool homes and industrial plants can increase natural gas prices. At the same time, during the cold winter season, there is increased gas demand, especially across Europe, North America, and East Asia, to heat homes and industries. When chilly weather hits—like snowstorms or Arctic blasts—it can freeze up gas wells. That means less output, slower deliveries, and higher prices. Hurricanes often shut down oil and gas operations temporarily, pushing prices higher.
- Economic Growth: Strong global economic growth, especially in the US, China, Japan, South Korea, and the EU, boosts industrial demand for natural gas. The manufacturing sector (chemicals, automotive, petrochemicals) depends heavily on gas for feedstock and power generation. However, a weak global economic outlook reduces gas demand, and thus, prices drop.
Geopolitics
- Geopolitical tensions, such as the 2023-2025 Middle East Crisis and the 2022-2025 Russia-Ukraine war, negatively impact gas prices. These tensions disrupt pipeline gas or LNG supplies from producing countries (Russia, Qatar, Australia) to Europe, causing price spikes.
- Russia-Ukraine War: Sanctions on Russian gas disrupted gas supplies to Europe, causing price surges.
- Middle East Conflicts: The tensions in the Middle East impact LNG exporters like Qatar. Following the Houthi Rebel attacks on commercial shipping passing along the Red Sea, Qatar has detoured its LNG tankers towards the Cape of Good Hope (Southern Africa), a much longer route to export LNG to its European clients.
Gas prices saw mixed reactions in the US, the UK & Continental Europe on May 26, 2025, amid growing concerns over supply disruptions.
Prices rose in Europe after unplanned capacity cuts were announced at Norway’s massive Troll gas field due to external power issues, compounding ongoing maintenance at other key sites like Nyhamna and Aasta Hansteen.
Equinor extended a partial outage at Troll until May 30 following a compressor failure. The outage, which began after the field’s annual one-day stop-start test on May 21, has affected output by 34.6 million cubic meters per day, leaving Troll’s remaining capacity at 90 mcm/d.
Norway is under pressure to maintain stable flows as the continent scrambles to refill gas storage, currently at just 45%. Geopolitical tensions also weigh on sentiment, particularly as hopes for a Ukraine peace deal continue to fade.
The US natural gas price closed at roughly $3.66/MMBtu on May 26, compared with 3.75/MMBtu recorded on May 25.
UK natural gas futures held steady at 87.15 pence per therm.
European natural gas futures topped €37.25/MWh on May 26, up from €36.45/MWh recorded on May 23.
Read: Natural Gas Prices May 20, 2025: US, UK & Europe
Major Natural Gas Price Benchmarks
Region | Benchmark | Key Features |
United States | Henry Hub (NYMEX) | Reflects supply/demand in North America Tied to US shale gas production & pipeline infrastructure dynamics |
Europe | TTF (Netherlands) | Europe's leading gas benchmark Reflects LNG and pipeline flows from Russia, Norway, and LNG imports |
Asia | JKM (Japan-Korea LNG) | Reflects Asian demand, LNG deliveries to Japan & South Korea |
United Kingdom | NBP (National Balance Point) | Linked to European gas markets Influenced by LNG & North Sea supply Futures |
Other benchmarks include
- Oil-Linked Pricing: Some long-term contracts ( Russia’s Gazprom pipeline gas exports) still use oil-indexed pricing. Gazprom has long preferred long-term contracts and hybrid pricing with spot elements to hedge against price volatility.
- AECO Canada: It is Canada’s benchmark linked to Western Canada’s pipeline gas supply
Key Factors Influencing Natural Gas Prices
Several supply and demand factors influence natural gas prices. Below is a detailed breakdown of key aspects affecting natural gas prices:
Supply Factors
- Production Levels: Qatar, Russia, and US shale gas production heavily influence global supply. Thanks to fracking technology, the US is already the world’s top natural gas producer. Thus, higher gas production by these countries can push prices down due to oversupply.
- Storage Inventories: Natural gas is stored in underground facilities. Thus, high storage levels generally lead to lower prices. At the same time, low storage levels signal scarcity, leading to price surges.
- Imports/Exports: Fluctuations in gas exports via pipelines or LNG from key producers can significantly affect regional prices. For instance, European gas prices soared by 30% in September 2022 following the indefinite shutdown of Russia’s Nord Stream 1 pipeline. The pipeline, which runs under the Baltic Sea to Germany, historically supplied between 50 – 55 BCM/year of gas to Europe. Likewise, rising liquefied natural gas (LNG) exports by Qatar, Australia, and the US can lead to oversupply and lower prices.
Demand
- Electricity Sector Competition: Countries rely on various sources for power generation, including natural gas, nuclear power, coal, and renewable energy like wind and solar. Suppose the prices of coal and renewables increase. In such developments, electricity producers will shift to natural gas. Conversely, if coal or renewable sources become cheaper, demand for gas will fall, resulting in lower gas prices.
- Weather conditions: Weather plays a significant role in influencing natural gas prices. During the summer, there is a massive surge in the demand, especially in Europe & North America, for air conditioning systems. The high demand for electricity to cool homes and industrial plants can increase natural gas prices. At the same time, during the cold winter season, there is increased gas demand, especially across Europe, North America, and East Asia, to heat homes and industries. When chilly weather hits—like snowstorms or Arctic blasts—it can freeze up gas wells. That means less output, slower deliveries, and higher prices. Hurricanes often shut down oil and gas operations temporarily, pushing prices higher.
- Economic Growth: Strong global economic growth, especially in the US, China, Japan, South Korea, and the EU, boosts industrial demand for natural gas. The manufacturing sector (chemicals, automotive, petrochemicals) depends heavily on gas for feedstock and power generation. However, a weak global economic outlook reduces gas demand, and thus, prices drop.
Geopolitics
- Geopolitical tensions, such as the 2023-2025 Middle East Crisis and the 2022-2025 Russia-Ukraine war, negatively impact gas prices. These tensions disrupt pipeline gas or LNG supplies from producing countries (Russia, Qatar, Australia) to Europe, causing price spikes.
- Russia-Ukraine War: Sanctions on Russian gas disrupted gas supplies to Europe, causing price surges.
- Middle East Conflicts: The tensions in the Middle East impact LNG exporters like Qatar. Following the Houthi Rebel attacks on commercial shipping passing along the Red Sea, Qatar has detoured its LNG tankers towards the Cape of Good Hope (Southern Africa), a much longer route to export LNG to its European clients.
Shell Nigeria Gas (SNG) engaged more than 100 gas off-takers in the Agbara Ota industrial zone in Ogun State. Shell Nigeria Gas’ engagement is part of its efforts to deepen gas distribution for power generation by industries and other businesses.
SNG assembled over 100 gas off-takers, including industry partners and government representatives. They discussed strategies for gas supply to industries and businesses.
It interacted with the off-takers in customer forums to receive feedback and explore ways of improving gas supply.
Strengthening Stakeholder Collaboration
Shell Nigeria Gas organized a forum titled “The Natural Gas Partner of Choice, Powering Nigeria.”
Officials from the federal government, Ogun State government, NNPC, and the Manufacturers Association of Nigeria attended the forum.
According to Shell Energy Nigeria’s General Manager, Markus Hector, “Shell’s commitment is to build, operate and maintain a gas distribution system that is reliable, resilient, transparent, and growth-oriented, to support businesses, industries and ambitions.”
Background: Shell Nigeria Gas
Shell Nigeria established Shell Nigeria Gas Limited in 1998. This subsidiary develops, operates, and maintains gas distribution infrastructure and delivers gas to industrial and commercial customers across Nigeria.
As such, it operates over 150 kilometers of pipeline infrastructure, supplying natural gas to more than 100 manufacturing and power generation customers in key industrial zones such as:
- Ogun State (notably the Agbara-Ota industrial cluster)
- Rivers State
- Abia State
In March 2024, SNG signed a $100 million agreement with Oyo State to develop a gas supply and distribution network for industrial and commercial users across the state.
Under the 20-year deal, SNG will construct and operate the pipeline network, which is expected to deliver up to 60 million standard cubic feet of gas daily.
Consequently, the project will begin with a 15-kilometer pipeline and is expected to bring its first gas flow in Q4-2025.
| Customer / Project | Sector | Location | Details |
| Brass Fertilizer and Petrochemical Co. | Petrochemicals | Bayelsa State | To receive 270 million scf/day of gas for a $3.5 billion fertilizer plant |
| Industrial Clusters in Oyo State | Manufacturing & Power | Ibadan, Lagos-Ibadan Axis | Up to 60 million scf/day to be delivered via a 15-km gas pipeline |
| CNG Companies (various) | Energy / Distribution | Multiple locations in Nigeria | SNG supplies bulk gas for further distribution via trucks |
| Industrial Clients in Agbara-Ota Area | Manufacturing | Ogun State | Includes food processing, pharmaceuticals, packaging, etc |
| Aba Cluster Clients | Manufacturing & Power | Abia State | Cluster of SMEs and large industries supported by direct gas supply |
| Port Harcourt Cluster Clients | Industrial & Commercial | Rivers State | Industries using gas for power generation and processing needs |
Alignment with the “Decade of Gas” Initiative
In March 2021, the federal government established the “Decade of Gas.” This government initiative aims to harness the country’s vast gas reserves to drive economic growth and development.
Under the plan, the government will ramp up gas use in the decade from 2020 to 2030 in partnership with other stakeholders.
Shell Nigeria Gas supports the government’s Decade of Gas initiative through:
- Expansion into Oyo State to supply gas to industries in the State.
- Ongoing engagement with its key customers and partners to deepen gas distribution.
The Special Adviser to the President on Energy, represented by the Team Lead, Gas, Lateef Biobaku, shared the government’s vision for the oil and gas industry. He stated, “Our vision is to unlock Nigeria’s energy potential, to help fuel economic growth, to drive industrialization, and to help diversify our economy. The aim is to attract investments to help raise oil and gas production to 4 million barrels per day and 12 billion cubic feet of gas per day by 2030.”
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