Excess Natural Gas Supplies Lead LNG Prices to Hit New Lows Says New Report

The report LNG Industry to 2016: Increasing Gas Supply Challenges Future Growth Prospects provides an in-depth analysis of the global LNG (Liquified Natural Gas) industry and highlights the various concerns, shifting trends and major players in each geographic region. This oil and gas report provides forecasts for the liquefaction and regasification sectors of the LNG industry, of planned liquefaction and regasification terminals and of planned major global LNG projects to 2016.

The global economic crisis has led to a significant drop in natural gas demand globally. The global natural gas demand dropped drastically in 2009, which led to a huge slump in natural gas prices. Excess production and low demand have forced natural gas prices to remain low at an average of $4 – $4.5 per million British thermal units (MMBTU), even with crude oil prices hovering at around $80 a barrel. LNG demand too has suffered, as a result of it being interdependent with natural gas demand. As a result, LNG prices have dropped significantly in the recent past. Prices of spot LNG in Asia for immediate delivery slumped to as low as $3.8 per MMBTU in May 2010 from about $25 MMBTU in 2008 as the global recession cut demand from Japan and South Korea.

While the global LNG demand dropped substantially, the supply of LNG improved, with new LNG liquefaction plants becoming operational in Qatar, Yemen, Indonesia and Russia. The new planned LNG terminals may further deepen the LNG supply glut. The excess of natural gas supplies in the world has led LNG spot prices to hit new lows. The drop in spot LNG prices has made buyers rethink on long term LNG contracts. Importers can now easily tap the global market for spot cargoes at lower prices than the long-term supply agreements.

LNG Industry to 2016: Increasing Gas Supply Challenges Future Growth Prospects

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