Global LNG supply to increase by 2.5-3 percent as of 2020

Oil&Gas Materials 28 December 2020 15:27 (UTC +04:00)
Global LNG supply to increase by 2.5-3 percent as of 2020

BAKU, Azerbaijan, Dec.28

By Leman Zeynalova – Trend:

Global LNG export growth is forecast to slow in the short term, compared to the last three years, Trend reports with reference to Gas Exporting Countries Forum (GECF).

“Before the COVID-19 pandemic, GECF forecasted an increase of 6.5 percent (23 Mt) y-o-y in incremental LNG exports in 2020, mainly driven by the U.S. However, the forecast LNG supply growth has since been revised downwards. The current LNG oversupply, which has been exacerbated by COVID-19, has driven global spot gas and LNG prices to all-time lows. This resulted in U.S. spot LNG becoming uneconomical for delivery to Europe, which usually acts as a sink market in periods of LNG oversupply.

As such, around 170-180 LNG cargoes from the U.S. for loading between May and September 2020 were cancelled due to the negative price spreads between the European and Henry Hub futures prices for delivery during this period.

Given the low spot price environment, we expect a loss in LNG supply of between 12 and 15 Mt in 2020, mainly from the U.S. This could see global LNG exports, excluding reloads, grow by 2-2.5 percent in 2020. However, considering the increase in reload activity from Europe to Asia in 2020, global LNG supply (including reloads) is forecast to increase by 2.5-3 percent this year.

For 2021, if global gas and LNG demand returns to pre-COVID levels and there are no U.S. LNG shut-ins, global LNG exports could grow by 6-7 percent. This is based on the assumption that the LNG volumes lost in 2020 come to market next year. However, this forecast has been revised down from our previous forecast of 7-7.5 percent mainly due to maintenance activity planned at several LNG facilities globally in 2021, particularly the Gorgon LNG facility in Australia and the Hammerfest LNG facility in Norway which have both been impacted by technical issues. In addition, the cancellation of the Tango FLNG charter in Argentina and feedgas issues in some countries have also been factored in,” reads the latest GECF report.


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