US consulting group Waterborne Energy has projected that ‘winds of change’ will bring a major shift to the global LNG market in 2009, as production rises and spot prices decline accordingly.
While some forecasts have estimated a tight LNG market ahead, Waterborne Energy appears to suggest otherwise.
The Houston-based consulting firm, which tracks and analyses LNG markets, expects global LNG production to significantly increase next year and international spot prices to drop accordingly.
As detailed in the 17th December 2008 edition of the US Waterborne LNG Report, an expected 2.8 tcf of new LNG production capacity should come online in the first half of 2009, if all projects remain on schedule.
Steve Johnson, President of Waterborne Energy explained, “While 2009 will start slow, we expect a 30% rise in total LNG production worldwide by year end.”
$quot;We don't believe Asia and Europe will be in a position to absorb this new production, despite 11 new re-gas terminals under construction. And the economic downturn will limit power demand in Europe, Asia and the US.$quot;
Johnson indicates that by May 2009, excess global LNG will begin to move toward US import facilities simply because it has no place to go. Furthermore, it is thought that transportation of such excess LNG could evolve as a challenging tanker market looms in the year ahead.
$quot;The LNG tanker market will face some challenges in 2009,$quot; said Johnson. $quot;Forty-five new tankers are scheduled to be delivered from the yard next year, adding length to an already long market; although some of the new capacity will be dedicated to new projects. We see fewer long-haul voyages and an increase in shorter voyages; spot tanker rates should maintain an average of about $45,000 per day.$quot;
According to Johnson, US import volumes hit a five-year low in 2008, averaging only about .95 bcf per day, due to delays in global liquefaction projects and production plant outages, combined with sharp increases in Asian and European demand. LNG shipments to Asia were up in 2008, to 5.7 tcf – from 5.3 tcf in 2007; while European imports also increased this year to 2.1 tcf – from 1.9 tcf in 2007.
Waterborne Energy monitors, analyses and reports on global shipments of LNG and LPG, offering subscribers exclusive and comprehensive analysis of LNG and LPG markets throughout the US, Central and South America, Europe and Asia.