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New wave of LNG planned; spot prices to recede

Warren True
Chief Technology Editor-LNG/Gas Processing

HOUSTON, Dec. 19 - Global LNG production will ramp up in 2009, driving international spot prices lower, according to Waterborne Energy, Houston, which tracks and analyzes world LNG markets.

While 2009 will start slowly, reported company Pres. Steve Johnson in a Dec.19 release, a 30% rise in global LNG production by yearend is likely. The Dec. 17, 2008, edition of the US Waterborne LNG Report informs that 2.8 tcf of new LNG production capacity will come online in first-half 2009, if all projects remain on schedule.

Asia and Europe will be unable to absorb this new production, he said, "despite 11 new regasification terminals under construction." The economic downturn will limit power demand in Europe, Asia, and the US.

By May 2009, excess global LNG will begin to move toward US import terminals "because it has no [other] place to go," said Johnson.

Lake Charles and Cove Point will be the first to receive LNG cargoes by summer. US imports will average about 40 bcf/month by July, he added, and could reach 64 bcf/month by yearend.

"The LNG tanker market will face some challenges in 2009," Johnson added, as 45 new tankers are to be delivered in 2009, "adding length to an already long market." 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/day.

Johnson also said that data for 2010 suggest US import volumes will surpass the 2007 record import year average of 2.1 bcfd.

US import volumes hit a 5-year low this year, averaging only about 0.95 bcfd, due to "delays in global liquefaction projects and production plant outages, combined with sharp increases in Asian and European demand."

LNG shipments to Asia in 2008 have increased, to 5.7 tcf from 5.3 tcf in 2007. European imports also increased this year, to 2.1 tcf from 1.9 tcf in 2007.

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