BAKU, Azerbaijan, Feb.10
By Leman Zeynalova – Trend:
Liquefied natural gas (LNG) supply is set to grow at 7 percent in 2020, as freshly commissioned US projects push more LNG into an already saturated global market, Trend reports citing Wood Mackenzie.
“In 2019, the global LNG market relied heavily on Europe to balance. Surging new LNG production from US and Australian projects met stuttering APAC LNG demand growth and, with no place else to go, spot LNG was sold at a discount into European terminals,” said the company in its analysis.
Europe will again be called upon to save day, however, unlike 2019, gas storage in Europe will start the year at record highs, according to Wood Mackenzie.
“How the global LNG market will respond to such sustained low prices remains to be seen, with several possible outcomes. We explored those outcomes in more detail in "Global Gas and LNG: 5 things to watch in 2020", where we also shared our price prediction for Japan LNG spot (DES). Fill in the form on this page to get your complimentary copy.”
The global gas and LNG market enters 2020 with the lowest ever winter spot prices, in the middle of its greatest supply push, both short and long term, said the company.
“The big suppliers – Qatar, Russia and the US – are locked in a battle for market share, waiting to see who blinks and watching closely to see whether low prices will spur policy changes in the big Asian markets.”
At the start of 2019, Wood Mackenzie said it expects a record year for LNG project sanctions and it didn’t disappoint.
“71 mmtpa was sanctioned and all of the projects we picked took Final Investment Decision (FID). Indeed it was so strong, that some of the projects we had slated for delays made it over the line too. The 7.7 mmtpa, NLNG Seven project, making it in on the 27th of December, while most of us were still digesting our Christmas dinner,” said the company.
Wood Mackenzie believes this year it is a little harder to call. “There will be no let-up in projects pushing for FID, but we expect sponsors to start asking more questions as the pain of low gas prices starts to bite. We think the scale of capacity sanctioned will be at least 50 mmtpa again and possibly larger. Download "Global Gas and LNG: 5 things to watch in 2020" for our FID outlook to 2021.”
----
Follow the author on Twitter: @Lyaman_Zeyn