Asian gas demand opens way for new projects
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.