AUSTRALIA: Notwithstanding the achievement in shipping the first liquefied natural gas (LNG) cargo from the world's largest vessel, Prelude owner Royal Dutch Shell probably wishes it was selling its product into better market conditions.
The Prelude floating LNG vessel - about four soccer fields long - dispatched on Monday its first cargo from its position off northwestern Australia to a customer in Asia, Shell said in a statement on Tuesday.
When Prelude was conceived more than a decade ago, Shell would have been confident that Asia was the right market to target for LNG, given the region's strong energy demand growth and the need for cleaner fuels than coal.
The problem for Shell, though, is that Prelude is effectively the last cab off the rank, being the final of eight projects, collectively worth some $200 billion, to come online in Australia in the past five years.
Australia has now overtaken Qatar as the world's largest producer of LNG, and while the long-term prognosis for the super-chilled fuel may still be positive, 2019, is proving a tough year in biggest market Asia.
Of the five biggest importers in Asia, only China has seen any growth in demand in the first five months of the year, compared to the same period of 2018.
China imported 23.9 million tonnes of LNG over January to May, up 22.6pc on 19.5 million tonnes from the same months last year, according to vessel-tracking and port data compiled by Refinitiv.
It's worth noting that while this looks like robust growth, it's about half of the 41pc rate China achieved in 2018.
The growth story in the world's second-biggest buyer of LNG was overshadowed by declines almost everywhere else in Asia.
Top buyer Japan imported 32.9 million tonnes in the first five months of the year, down from 36.2 million. Third-ranked South Korea bought 16.8 million tonnes, down from 19.2 million.
India's imports slipped slightly to 8.6 million tonnes from 8.8 million, and Taiwan's fell to 6.6 million from 7.3 million.
Among smaller Asian buyers there was better news, with Pakistan boosting imports to 3.5 million tonnes from 2.9 million, Thailand's take rising to 2.2 million from 1.7 million, and Singapore holding purchases steady at 1.4 million.
Looking at the top five Asian buyers, it's clear that China's 4.4 million tonnes increase in its imports in the first five months of this year is not enough to offset the loss of a total of 6.6 million tonnes from the other four.
This soft demand picture, coupled with the arrival of more LNG to the market, not just from Prelude but also from other Australian and US projects, has driven spot prices to the lowest in more than three years.
LNG for prompt delivery to China was at $4.25 per million British thermal units (mmBtu) in the week to June 10, lowest since April 2016 and down 63pc from last year's peak at$11.60, hit a year ago in the week to June 15, 2018.
Market views on the weakness in LNG prices in Asia have tended to focus on the additional supply, but it seems clear that softening demand is playing a role as well.
While demand may get a seasonal lift from higher consumption over the northern hemisphere summer, it's likely the story will remain one of too many cargoes chasing too few buyers.
This means LNG is increasingly likely to flow to Europe, especially from major producers like Qatar and the United States, which can supply both the Atlantic basin and Asia.
European imports were 38 million tonnes in the first five months of the year, almost double the 19.8 million in the same period last year, according to Refinitiv data.
Cheaper LNG in Europe encourages coal-to-gas switching and also boosts the competitiveness of the fuel against pipeline supplies from Russia.
For now it appears that Europe's ability to soak up excess LNG is preventing prices from slipping further, while Asia looks weak overall.