Gas glut forecast to linger

THE global glut of liquefied natural gas could last another decade or longer as more projects come online, putting pressure on prices for Australia’s secondbiggest export, Macquarie analysts say.

An investment bank report casts doubt on forecasts by the energy industry and other analysts for a supply “balance” early next decade, helped by factors including increasing Chinese demand.

“We see global oversupply from operating and under-construction projects lasting until 2022, but including advanced projects, this extends until 2027,” Macquarie said in the report.

The analysts acknowledged LNG demand this year had been stronger than anyone had expected.

But they said LNG contracts set for repricing negotiations over the next few years, including those held by Woodside Petroleum at its Pluto LNG project in Western Australia, were at risk.

The bank kept its “under-perform” rating on Woodside stock but did not cut its target price of $28.10 a share.

It cut its spot LNG price forecast — which differs from the oil-linked contract prices most Australian LNG is sold at — for next to year from $US6.50 per million British thermal units to $US5.25.

The latest Gladstone port statistics showed LNG from Queensland’s three plants, on Gladstone’s Curtis Island, continued to increase exports last month but did not hit a record set late last year.