Asian gas de­mand opens way for new projects

New Straits Times - - BUSINESS / WORLD -

NUSA DUA/SIN­GA­PORE: Soar­ing gas de­mand from China, In­dia and South­east Asia is suck­ing up a liq­ue­fied nat­u­ral gas (LNG) sup­ply glut which was ex­pected to last for years, open­ing op­por­tu­nity for new pro­duc­tion from East Africa to North Amer­ica that had been deemed part of the over­hang.

Trade flows in Eikon show global LNG im­ports have risen 40 per cent since 2015, to al­most 40 bil­lion cu m a month. Growth ac­cel­er­ated last year, with im­ports up by a fifth, largely due to China, but also South Korea and Ja­pan.

Asia’s LNG mar­ket has been glut­ted since 2015, fol­low­ing mas­sive de­vel­op­ment that be­gan in the early 2000s. But a gasi­fi­ca­tion pro­gramme in China last year and strong eco­nomic growth across Asia pushed up de­mand, con­tribut­ing — along with a cold win­ter — to a dou­bling of LNG spot prices from mid-last year.

The mar­ket is ex­pected to re­main rel­a­tively tight for the re­main­der of this year, with China’s gas pro­gramme con­tin­u­ing and de­lays at sev­eral ex­port projects.

“The tight mar­ket is go­ing to con­tinue be­cause de­mand is grow­ing and ex­pected projects have been de­layed,” said se­nior vice-pres­i­dent at the en­ergy divi­sion of Mitsubishi Corp.

This un­ex­pected tight­en­ing opens the way for new projects for the first time in sev­eral years.

Many projects were de­layed or axed when oil and gas prices started tum­bling in mid-2014. Now en­ergy com­pa­nies are re­turn­ing to health as prices have im­proved.

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