Warren R. True
OGJ Chief Technology Editor-LNG/Gas Processing
HOUSTON, July 1 -- At mid-2009, prospects for global LNG demand “remain bleak,” according to a research report issued at the end of June by Barclays Capital. The LNG market in 2009 is proving itself “truly global,” as supply-demand fundamentals for the first 6 months forced regional prices to converge, says the report.
With demand deteriorating sharply in Asia, spot prices in most of the Pacific Basin collapsed to below those in Europe and the US.
Major Asian economies that import LNG—Japan and South Korea, primarily—continue to struggle, and “emerging market participants”—mainly China—are only partially offsetting the slowing demand, says the report.
In the Atlantic Basin market, relative weakness in US gas prices compared with European benchmarks is “proving to be a limiting factor for US LNG imports.” Europe, however, continues to unload record LNG cargoes, its natural gas prices maintaining relative strength.
Given these global supply-demand trends, LNG imports to the US will grow only modestly for the rest of the year, averaging 1.6 bcfd for all of 2009. Barclays said European storage levels and transatlantic price differentials are the leading indicators for US LNG import trends.
Asian patterns
Earlier in June, Houston-based Waterborne reported that continuing recession and decline in demand for natural gas had pulled down Asian LNG imports by more than 12% in May from levels of May 2008.
It was the fifth consecutive month in 2009 that imports had fallen below those of 2008, said Waterborne Pres. Steve Johnson. And it explains why US LNG imports at that point in 2009 were up 36%.
Johnson said, “There is very limited capacity for LNG storage in the global market today besides the US, and we have yet to feel the effect of incremental supply.”
According to Waterborne, decreased demand and recession had depressed May LNG imports for Japan and South Korea, compared with 2008. Japan’s LNG imports dropped 11%; South Korea’s 17%.
Taiwan, on the other hand, imported 5% more LNG in May, said the Waterborne report. China, taking advantage of relatively low spot prices, imported a record 576,000 tonnes of LNG, pushing up its May imports by 59% over 2008.
Contact Warren R. True at [email protected].