LNG Oversupply May Be Looming

Although China will continue to raise its liquefied natural gas (LNG) imports this year, the 2019 rise in the world’s key LNG demand growth market may not be enough to absorb all the new supply coming on stream over the next months.

According to analysts at this week’s LNGgc Asia conference in Singapore, new demand this year would be lower than the expected new supply, Oil Price reported.

Jason Feer, head of business intelligence at Poten & Partners, said that the company expected 33 million tons of new global LNG supply to hit the market this year, while demand is seen growing by just 16 million tons, Reuters reported.

China will still see its LNG demand growing, but at a slower pace than the growth between 2017 and 2018.

China’s LNG imports reached a new record-high in January, but as the winter heating period is coming to an end in mid-March, imports are expected to drop.

At the same time, oversupply in Asia’s LNG market resulted in Asian spot LNG prices dropping again last week to the lowest since September 2017.

China’s breakneck demand surge of the past two years is expected to slow down this year as Beijing is determined to avoid severe shortages by boosting pipeline connectivity, building more storage and import terminals, and raising domestic natural gas production.

“Economic slowdown, a more considered approach on coal-to-gas switching and increased domestic infrastructure availability will mean LNG demand will slow in 2019, from the 40-45% growth we have seen in 2017 and 2018,” energy consultancy Wood Mackenzie said in its 2019 LNG outlook in early January.

source: Financial Tribune