Liquefied natural gas market could see an additional 100 million tonnes per annum sanctioned in the next 6-18 months, extending oversupply of LNG in Asia to 2025, said global research and consulting company Wood Mackenzie Thursday.
"LNG market facing a wall of new supply just as China's gas demand growth has faltered, it is surprising how few new projects chasing a final investment decision have been postponed," Vice President Global Gas & LNG Research for Wood Mackenzie, Noel Tomnay said in a press release.
Tomnay added that China's LNG import may see a rise of 17 percent year on year between 2015 and 2020, from 20 to 41 million tonnes a year, but that much LNG may not find a quick way into the Chinese market.
"In contrast, China's LNG imports fell by almost 4 percent year on year in the first half of 2015, as a consequence of subdued industrial output and fuel competition, which was driven by relatively low priced oil."
"The outlook for longer term incremental LNG demand growth in China is also being negatively affected and with lower industrial output and power generation competition increasingly characterizing other key Asian LNG markets, like South Korea, Asian buyers are not in a hurry to finalize new LNG contracts," Tomnay said.
Despite the oversupply concerns, most companies, including majors like Shell, PETRONAS, ENI, Anadarko, BP, ExxonMobil and Woodside, are pushing ahead with their new LNG projects since they fear postponements could invalidate contracts, which may hamper stakeholder support, and competitors may use that opportunity to gain new niche.
As Asian countries increased their LNG imports, they also look for new ways to reduce the price of imported LNG, which may include new sources of supply from North America.
By Gokhan Yildiz
Anadolu Agency
gokhan.yildiz@aa.com.tr