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If 2016 was the year the LNG market broke out of the doldrums, 2017 looks like evolving into a year of high growth in demand and growing concern about the adequacy of post-2020 supply.
LNG supply – growing strongly
First half 2017 supply was 140 million tonnes, 10% higher than the same period last year but less than expected due to a series of scheduled and unscheduled shut downs.
LNG demand – very strong growth, particularly NE Asia
Demand grew strongly over the first half of the year and totalled 142.6 million tonnes, 11.6% higher than the same period last year.
Demand increased across the board with the notable exceptions of the UK, Argentina & Brazil. Chinese LNG imports increase substantially to 15.9 million tonnes over the first half of 2027, an increase of 38% compared with the same period last year. Korean imports were up 17.7% in the first half and Japanese imports also rose.
New liquefaction capacity – substantial increase in 2017
In 2017, 34 million tonnes of new liquefaction capacity is due to come on line from seven projects.
Production from the new liquefaction plants was forecast to be almost 33 million tonnes in 2017 raising concerns of a glut in the market. This sounds a lot but 3+ million tonnes of that has already been lost due to unscheduled shutdowns in the first half and demand looks as if it will increase by about 27 million tonnes.
Substantial “excess” unlikely until 2019
Potentially production could increase by 35 million tonnes in 2018 but most of this could be absorbed and it will not be until 2019 when we might see “excess” production of about 11 million tonnes.
Market tightening, potentially significant shortfall in supply post 2020
The market is already much tighter than many expected and could be back into balance in 2020. It now looks as if we could be short 6 mill tonnes of liquefaction capacity in 2021. That rises significantly to 76 million tonnes in 2025 and 174 million tonnes in 2030!
by Tony Regan
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