Page 9 - NorthAmOil Week 27

NorthAmOil COMMENTARY NorthAmOil

COVID-19 weighs on LNG exports

as demand remains depressed

COVID-19 continues to depress demand for LNG

and batter exports, though some positive signs have

emerged amid a generally bearish outlook for the coming months

GLOBAL LNG exports are slumping as a result of June and July. This is because there is a price
lower demand globally amid the coronavirus contango between August and forward months,
WHAT: (COVID-19) pandemic – and the outlook for the while shipping rates are low.
LNG shipments from coming months remains largely bearish despite And by September, the number of US cargo
major exporters including a few bright spots. cancellations is expected to drop, with this
the US and Australia are This week, Australia’s government estimated recently forecast by Flex LNG’s CEO, Øystein
slumping. that the country’s export earnings from LNG Kalleklev, among others.
would drop by 26% year on year, to AUD35bn
WHY: ($24bn), in the coming financial year, which Looking up
Demand is still broadly runs July 2020-June 2021. There are some other positive signs as well,
depressed owing to Meanwhile, the US Energy Information suggesting an uptick in LNG demand in the
COVID-19. Administration (EIA) reported last week that medium term, if not the short term. Admittedly,
US LNG exports had declined by more than half this uptick is being driven in part by low LNG
WHAT NEXT: in 2020 so far. Citing data from consultancy IHS spot prices, but signs of growing demand – and
Some signs of upticks Markit, the EIA said gas deliveries to US lique- a resulting expansion of regasification capacity –
in demand in Asia are faction terminals had reached a record high of will be welcomed by exporters.
emerging, however. 9.8bn cubic feet (278mn cubic metres) per day in Companies preparing to ramp up LNG
March, but fell to less than 4.0 bcf (113 mcm) per imports include the Electricity Generating
day in June. Meanwhile, more than 70 cargoes Authority of Thailand (EGAT), which is set to
are estimated to have been cancelled for loading more than double the LNG volumes it receives
from US LNG plants in June and July, and the in 2021 and 2022.
latest media reports suggest that 40-45 cargoes Meanwhile, consultancy Wood Mackenzie
may have been cancelled for loading in August has predicted that Indonesia’s LNG imports
– a higher number than previously anticipated will remain resilient in the face of the demand
for that month. slump. The consultancy projects that the coun-
However, some trade sources cited by Reuters try’s LNG imports could hit 3.1mn tonnes in the
last week have suggested that loading a cargo in second half of 2020, which would mark a 63%
August might make more sense compared with increase y/y.

More than 70 cargoes are
estimated to have been
cancelled for loading from US
LNG plants in June and July.

Week 27 09•July•2020 www. NEWSBASE .com P9