BAKU, Azerbaijan, Feb.18
By Leman Zeynalova – Trend:
Wood Mackenzie research and consulting company predicts that 3 MT to 6 MT of liquefied natural gas (LNG) demand will be lost, or 4 percent to 10 percent of full year 2020 due to coronavirus, Trend reports.
“Our central case is for annual gas demand to be 2 percent below our pre-outbreak forecasts, assuming a swift recovery to normal demand by April; and by 4 percent in a more prolonged slowdown. LNG will be disproportionately hit because NOCs will favour domestic supplies and maintain offtake from pipeline imports which are already at minimum take-or-pay volumes,” said Robert Sims, Director, Short Term LNG analysis at Wood Mackenzie.
That would still mean some growth in China’s LNG imports; 4 MT in the swift recovery case to 64 MT for the year, but just 1 MT in the prolonged case to 61 MT, according to the analyst.
“The hit will be most severe in February and the months immediately following. And it comes when the market is already awash with LNG near the end of a mild northern hemisphere winter and with supply from new projects still coming on stream,” Sims believes.
“Covid-19 could be the straw that breaks the camel’s back – we can certainly see evidence of the market creaking. China’s biggest importer of LNG, CNOOC, has called force majeure on some of its cargoes for February delivery and there are rumours other buyers will follow suit. Asian spot LNG prices have sunk to new lows below US$3/mmbtu for April delivery. In Europe, the ‘sink’ for surplus LNG cargoes looking to find a home, spot gas prices are also plumbing new depths.”
The outbreak in the Chinese city of Wuhan - which is an international transport hub - began at a fish market in late December 2019. Since then over 1,000 people have died and over 45,000 people have been confirmed as infected.
Some sources claim the coronavirus (or COVID-19) outbreak started as early as November 2019.
Aside from Mainland China, the cases of coronavirus spreading have also been confirmed in Japan, Singapore, Thailand, South Korea, Hong Kong, Australia, Germany, the US, Malaysia, Taiwan, Vietnam, Macau, France, Canada, the UAE, India, Italy, Russia, Philippines, the UK, Nepal, Cambodia, Belgium, Spain, Finland, Sweden and Sri Lanka.
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