Page 5 - GLNG Week 14

GLNG COMMENTARY GLNG
the country’s trade war with the US. And over- all, Asia continued to account for 69% of global LNG demand, GIIGNL found, though this was down from 76% in 2018. Japan remains the lead- ing LNG importer despite its demand contract- ing by 6.8% last year, and the country accounted for a 21.7% market share, or 76.9mn tonnes.
In Europe, meanwhile, several conditions enabled an increased intake of LNG, including declining domestic production and pipeline imports, as well as a rise in gas-fired power gen- eration. Indeed, Europe accounted for the largest share of imports from the US, at 38%, compared with 37% for Asia. However, much of the surplus volumes heading to Europe went into storage, and now, as demand collapses and storage lev- els are at record highs, LNG shippers are run- ning out of options for where to direct surplus cargoes.
GIIGNL noted that there were no new coun- tries importing LNG for the first time in 2019, though seven new regasification terminals started up in countries that already import the fuel. And additional regasification infrastruc- ture is currently under development in several countries, and due to enter service in the com- ing years. This could help boost demand and go some way towards easing the supply glut, though planned new liquefaction capacity sug- gests that oversupply will still take some years to address.
The number of LNG-importing countries remained unchanged at 42, GIIGNL said, while the number of exporters rose by one to 21 as a
result of Argentina shipping its first cargo from the Tango floating LNG (FLNG) facility.
What next?
After this record year, LNG trade is now set to decline as coronavirus (COVID-19) continues to depress demand. Even before the virus spread across the world, leading to countries imposing lockdowns of varying severity to contain it, there was concern about LNG producers facing head- winds this year as spot prices for the fuel sank to new lows. Now the situation is more challenging than anyone foresaw, and how long lockdown measures will remain in place is an unknown factor that could further exacerbate market conditions.
“To allow natural gas to penetrate new mar- kets, prices need to remain at levels that make gas competitive with alternative fuels in down- stream power and gas markets but, at the same time, support the significant investments needed in production, liquefaction, transportation, transmission and downstream infrastructure,” GIIGNL’s president, Jean-Marie Dauger, wrote in the introduction to his group’s report. “A bal- ance will have to be found, and in the end, the scale of new developments will depend on the industry’s competitiveness, as well as on its abil- ity to demonstrate its environmental benefits, in particular by increasing efforts to detect, meas- ure and reduce methane emissions,” he added.
Next year’s annual GIIGNL report – when it is published – looks set to paint a starkly different picture compared to the current one.™
Additional regasification infrastructure is currently under development in several countries.
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