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The World Is On The Verge of LNG Market Change #Energy

The LNG market that has an increasing share in the world natural gas trade day by day is on the verge of an important change.

The fact that Qatar, one of the biggest LNG suppliers, is under economic and diplomatic pressure looks like an important incident that will change the natural structure.

According to the report of International Gas Union (IGU) in 2017, the global LNG market in 2016 reached the highest level of its history with 258 million tons by growing 5% compared to the previous year. The growth rate of LNG market in the previous years was on average 0.5% per year.

Such a huge increase in LNG trade was triggered when the export projects of USA and Australia were implemented.

The rise in demand was from Asian market in which China is the leader actor that firstly has increased its LNG demand to 27 million tons with a rise of 35%.

In 2016, the condensation capacity in the world increased to 339 million tons per year and it surpassed the previous year’s capacity that was 301.5 million tons. The leading roles in this capacity increase belonged to Sabine Pass LNG, Gorgon LNG and Australia Pacific LNG.

According to the data of IGU, the capacity increase under construction is 114.6 million tons/year as of January 2017.

The most important impact that changed the game in LNG market was from USA initiating LNG export.

Bud Coote, an expert in Atlantic Council that is one of the prominent think tanks of US, shared some information in a forum organized in Washington on 7 June 2017. According to Coote, US will reach LNG export capacity of 90 billion m3 per year in 2020 or 2021. This figure corresponds to nearly half of the annual natural gas volume that Gazprom currently supplies to Europe. Coote believes that US will direct only a smaller part of its export capacity to Europe.

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Except for US and Australia, the fact that world’s biggest pipeline gas supplier Gazprom will maintain LNG investments can lead to a competitive and aggressive LNG market in the future.

The condensation facilities’ capacity use rate of in the previous year was over 76%. The global condensation capacity in the medium term will increase to 453.6 million tons when the capacity of 114.6 million tons/year under construction is combined with the current 339 million tons. The LNG market will have to reach 344.7 million tons so that the supplier countries can preserve the same capacity use rate.

It means that the consumption of 258 million tons in the previous year will increase by 33.6% in a couple of years.

As the demand is not possible to increase in this rate, it is likely that there will be supply surplus in LNG in the next years.

The supplier that will experience the most negative impacts will undoubtedly be Qatar.

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Enerji IQ

Enerji IQ is the Turkey’s first local energy market intelligence and information provider, established as an independent dedicated company on October 2012. Enerji IQ published the first weekly issue in November 2012 and the first bi-weekly English issue in April 2013 and successfully formed a regional subscriber portfolio, with the genuine operational news, in-depth trend and regulatory analysis with commentary on price drivers.

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