Bank of America Merrill Lynch, the US investment bank, has forecast a possible LNG supply crisis in Europe in winter 2012 because of cargo competition from Asia. However, the bank's view is seen by some as overblown.
The downbeat Bank of America-Merrill forecast is seen as exaggerated by some analysts in the energy industry as it fails to take into account that global LNG supplies will increase this year as Pluto LNG comes on stream in Australia and Angola LNG begins production.
LNG demand in Europe is also flatter because natural gas demand has fallen by around 10 percent or more in some countries because of lower gas-fired power use, as the economic downturn hits euro zone countries, including large LNG importers, Spain and France, as well as other smaller LNG importers Italy, Portugal and of course Greece.
The Bank of America-Merrill warning is also made on the premise that all LNG cargoes are divertible, which isn't the case because of contracted volumes.
The UK, for example, has imported around 20 LNG cargoes since January 1, 2012. This is enough energy to supply the needs of a large part of England for about five months.
More than half of the LNG cargoes were delivered to the South Hook LNG terminal in Wales owned by Qatar Petroleum, the world's largest producer, and its partner ExxonMobil.
The balance was imported into Grain LNG on the Medway River, about 45 kilometres southeast of London. The Grain LNG comes from countries such as Algeria and Trinidad, and also from Qatar.
Centrica, the UK's largest household energy supplier, has a contract until 2014 with Qatargas for 2.4 million tonnes per annum of LNG to be delivered to the Grain terminal, owned by National Grid.
According to the Bank of America-Merrill forecast, it was "not implausible that UK LNG imports fall to zero by the end of 2012, especially if none of Japan's nuclear power plants are re-started this year."
That outcome is only seen by other analysts if the Strait of Hormuz is closed by Iran in an escalation of its nuclear dispute with the UN and LNG supplies from Qatar to Europe and the UK - as well as elsewhere - are cut off.
Global supply is also growing. The first Train of the Pluto LNG project comes onstream in several weeks and most of the 4.3 million tonnes per annum of production will be headed for Tokyo Gas and Kansai Electric Power.
The Angolan LNG project in southwest Africa is scheduled to enter commercial operations in May,
Angola LNG will produce 5.2 MTPA of LNG and much of it is likely to find its way to Europe, Asia and even South America.
The volumes from Angola were originally earmarked for delivery to the US and a new terminal was even built in Mississippi to receive them.
The Angolan LNG is seen as a factor to loosen up the spot market in 2012.
The UK could face a tighter LNG market in 2014 when the Centrica deal with Qatargas expires and as its own domestic North Sea reserves continue to run down.
However, Norway will be a key long-term pipeline gas supplier for the UK. In 2012, Norway is likely to supply about 20 percent of the UK's natural gas needs by subsea pipeline. Other UK supplies comes in pipelines from the Netherland and Belgium.
Analysts expect that winter 2012 LNG deliveries to the UK are likely to be little changed from the most recent November-March period.
