US LNG export capacity seen at 70 billion cu m/year by 2020: Goldman Sachs
Houston (Platts)--20Feb2013/442 pm EST/2142 GMT
The US likely would build liquefaction capacity totaling 70 billion
cubic meters/yr (6.77 Bcf/d) between 2016 and 2020, according to Goldman
The analysts, in a report issued late Tuesday, also predicted that 48
billion cu m/yr of liquefaction capacity would be added in Canada, as well as
21 billion cu m/yr potentially at a planned Mozambique project by 2022.
In 10 years, Goldman Sachs expects global liquefaction capacity to
rise to 660 billion cu m/yr, from the current 400 billion cu m/yr, said the
report, written by analysts Samantha Dart, Jeffrey Currie and Johan Spetz.
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"We maintain our view that global LNG balances will likely transition
from 2015 into a softer market with the start up and subsequent ramp up of
numerous liquefaction projects," it said. "However, we highlight that
potential demand growth in the next 10 years, particularly from Asia, is
likely to once again tighten spot markets, creating the necessary conditions
to accommodate some [but not all] of the large liquefaction projects
currently being proposed in North America."
Goldman Sachs said a number of factors could impact how much
liquefaction capacity would be built, including the potential that the US
Department of Energy would limit how much US LNG could be exported to
countries that do not have free-trade agreements with the US, as well as
uncertainty of the timing of liquefaction projects now being built and and
the development of Mozambique's large offshore gas reserves.
Even if the US could build more than 70 billion cu m/yr of capacity, the
global market would not need more than 80 billion cu m/yr of US liquefaction
capacity in the next decade, Goldman Sachs said.
CHINESE SHALE GAS
Assuming that liquefaction plants now being built would come online
beginning in 2015, LNG spot markets "will enter a bearish cycle in the
2016-2017 period, but subsequently transition into another bullish cycle from
2020," the analysts said.
Demand growth will be led by countries that are not members of the
Organization of Economic Cooperation and Development, especially China and
India, the report said. The OECD is an international trade organization that
promotes democracy and free-market economies. Non-OECD countries would likely
their LNG market share to 48% in 10 years and easily compensate for the
expected decline in Japanese LNG demand as it restarts nuclear generation
capacity that was taken offline after the March 2011 earthquake and tsunami,
the report said.
However, the potential for shale gas development in China, as well as
uncertainty over how much regasification capacity it would build, could
restrain expected growth in Chinese LNG demand, the report said.
"For the moment, we remain relatively aggressive regarding our Chinese
demand growth assumptions, but will continue to monitor China's progress on
shale gas exploration and its plans for future regasification capacity,"
Goldman Sachs said.
Supply availability issues that have surfaced in Egypt, Algeria and
Indonesia are likely to continue, the report said.
--Ron Nissimov, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com