Chinese LNG offtakes in February have continued to grow as the government is keen to reinvigorate industrial output. Meanwhile, price conscious buyers in Southeast Asia and the Caribbean are taking advantage of record low prices and soak up some of the excess supply.
Although several cargoes destined for China have been delayed and we have observed some diversions and cargo cancellations, Chinese LNG offtakes in February have remained robust as the government is keen to reinvigorate industrial output. Meanwhile, price conscious buyers in Southeast Asia and the Caribbean are taking advantage of record low prices and soak up some of the excess supply.
Chinese measures in response to the coronavirus have only had limited effects on national LNG offtakes in February, generally delaying cargoes rather than cancelling them. Instead, other market factors are weighing more on record-low Pacific LNG prices.
Much has been written – and speculated – about the impact the outbreak of a new coronavirus (aka 2019_nCoV, i.e. 2019_newCoronaVirus) in China has had on LNG demand in the country. The term ‘coronavirus’ refers to a large family of viruses responsible for illnesses such as the common cold as well as severe respiratory impairments, according to the WHO. Market concerns have been amplified by prevailing LNG oversupply in the Pacific region.
Offering gas import licenses has attracted both public and private players to facilitate an ambitious plan to more than quadruple LNG imports by 2027 in an effort to expand power delivery throughout the country
Important Asian market for LNG has recently only seen sporadic growth with major competitors to US LNG occupying precious market share whilst optimism among US LNG developers is no longer universal.
The story of installed US LNG capacity is certainly one of success – riding a wave of cheap domestic gas made possible through ultra-low interest rates amid robust Asian demand growth meant those US projects first out of the gate could bind portfolio players in long-term take-or-pay contracts that generate healthy returns for capacity developers.
Sempra-led joint venture put a preliminary stop to ‘Expansion Project’ of Cameron LNG and gains time to assess market development as trading conditions for US LNG toughened in 2H 2019
Reflecting the increasingly tough market for US LNG, Cameron LNG has requested to be able to delay the construction of the ‘Expansion Project’ of its LNG plant in Louisiana until May 2026 in a regulatory filing with the US Federal Energy Regulatory Commission (FERC) dated 24 January. The LNG development’s joint venture does not currently plan to make the final investment decision (FID) before mid-2021. Under the current FERC-approved plan, Cameron LNG would need to put the ‘Expansion Project’ into service by end-2020.
Gas distribution to east of the country finds new avenues via specialised trucks though massive distribution pipeline investments remain key to facilitate sustained LNG growth
Data by the charity Global Energy Monitor shows that 62 Indian coal-fired power projects have been cancelled whilst the Indian government is targeting raising the share of natural gas in the country’s energy basket to 15% by 2030.
Bulgaria on track to permanent gas supply diversification after importing two cargoes of LNG via Greece, signing FSRU deal and launching construction of a new interconnector
Once admonished by the European Commission for lacking political will to push ahead with EU plans for supply diversification, Bulgaria has emerged as Europe’s latest buyer of LNG whilst also pushing ahead with interconnector expansion, offshore developments and establishing a long-term LNG import channel.
We see higher gas demand and supply volatility in the UK and a greater role in LNG smoothing out pipeline supply shortfalls
UK LNG imports are likely have grown by 39.6% year-on-year by 31 December, the latest data of our LNG Market Tracker shows. We currently expect December LNG imports in the region of 4 million m3. Although to a large extent this increase in LNG imports is due to ample supply from the United States at times when overall demand growth in Northeast Asia is slowing, there is also an underlying issue of falling European pipeline gas supplies and associated foreign supply volatility.
Arrival of Shell-controlled LNGC suggests conversion of Elba Island LNG will see its first commercial export in the coming weeks
Our LNGJ Market Tracker shows the 159,800m3 LNGC Maran Gas Lindos – currently on charter with Shell following the BG Group takeover – has docked at Kinder Morgan’s Elba Island LNG plant. Shell’s offtake agreement with the terminal covers 100% of its capacity for the next 20 years.