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Global LNG market rebalancing unlikely before 2023/2024: Cedigaz

London (Platts)--7 Sep 2017 913 am EDT/1313 GMT


The global LNG market is not likely to rebalance before 2023 or even 2024 given the expected rise in supply outpacing demand growth, Paris-based industry group Cedigaz said in an update to its long-term market forecast published Thursday.


  • Research group signals continued LNG oversupply
  • Demand set to struggle to keep pace with supply
  • New projects needed post-2024 to meet new demand

According to Cedigaz, total LNG production capacity is to increase by 60% to 387 million mt/year by 2021.

"Demand will struggle to keep up with supply ramp-up and an oversupply situation should prevail," the group said.

"Rebalancing of the market is not expected before 2023, or even 2024," it said, assuming that new developments such as Fortuna FLNG in Equatorial Guinea go ahead as planned and some idle capacity returns such as in Egypt and Yemen.

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Forecasts vary on when the current assumed LNG supply glut is expected to end, with the Cedigaz estimate suggesting a longer period of oversupply than seen by other industry watchers.

The International Energy Agency, for example, said in June in its latest medium-term gas outlook that the global LNG glut would persist through the end of 2022.

US company Anadarko sees 2023 as the supply/demand inflection point, while Shell even questions the validity of an LNG glut at all, saying earlier this year that all produced cargoes are being sold and that LNG supplies to Europe -- often seen as the market of last resort in an oversupply situation -- are flat.


SUPPLY GROWTH


Cedigaz said the significant increase in effective liquefaction capacity to 2020-21 would be led by strong growth in Australia and the US until 2019 and 2021, respectively.

After 2021, unless new projects are launched, Cedigaz expects a gradual decline in production capacity due to the aging of some facilities (SouthEast Asia) and growing constraints on resources (Trinidad and Tobago, UAE, Oman Algeria, Indonesia and Malaysia).

A supply-demand gap could open up post-2024 unless new LNG production plants begin operations.

"Based on Cedigaz supply/demand estimates, new projects will need to come online post 2023/2024 to accommodate rising LNG demand," it said.

"Cedigaz expects that the strongest increases in LNG capacity from post-FID projects will originate from the US, Canada, Mozambique and Qatar." The group also said that Asian LNG imports are projected to more than double by 2035 to 368 million mt/year, a 3.8% average annual rate.

The traditional markets (Japan, South Korea and Taiwan) will remain stable, while emerging markets (such as China, India, Malaysia, Pakistan, Singapore and Thailand) are expected to grow significantly.

Their imports will rise from 41 million mt/year in 2015 to 193 million mt/year in 2035.

"New Asian markets -- Bangladesh, Indonesia, the Philippines and Vietnam -- will also contribute to the increase in imports from the 2020s, reaching almost 40 million mt/year in 2035," it said.

Asia will maintain its position as the leading LNG import region with a market share of around 70% to 2035.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Jonathan Dart, jonathan.dart@spglobal.com




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