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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

COMMENTARY LNG exports are slumping as a result of latest media reports suggest that 40-45 cargoes
lower demand globally amid the coronavirus may have been cancelled for loading in August
(COVID-19) pandemic – and the outlook for the – a higher number than previously anticipated
WHAT: coming months remains largely bearish despite for that month.
LNG shipments from a few bright spots. However, some trade sources cited by Reuters
major exporters including This week, Australia’s government estimated last week have suggested that loading a cargo in
the US and Australia are that the country’s export earnings from LNG August might make more sense compared with
slumping. would drop by 26% year on year, to AUD35bn June and July. This is because there is a price
($24bn), in the coming financial year, which contango between August and forward months,
WHY: runs July 2020-June 2021. while shipping rates are low.
Demand is still broadly Meanwhile, the US Energy Information And by September, the number of US cargo
depressed owing to Administration (EIA) reported last week that cancellations is expected to drop, with this
COVID-19. US LNG exports had declined by more than half recently forecast by Flex LNG’s CEO, Oystein
in 2020 so far. Citing data from consultancy IHS Kalleklev, among others.
WHAT NEXT: Markit, the EIA said gas deliveries to US lique-
Some signs of upticks faction terminals had reached a record high of Looking up
in demand in Asia are 9.8bn cubic feet (278mn cubic metres) per day in There are some other positive signs as well,
emerging, however. March, but fell to less than 4 bcf (113 mcm) per suggesting an uptick in LNG demand in the
day in June. Meanwhile, more than 70 cargoes medium term, if not the short term. Admittedly,
are estimated to have been cancelled for loading this uptick is being driven in part by low LNG
from US LNG plants in June and July, and the spot prices, but signs of growing demand – and

P4 www. NEWSBASE .com Week 27 09•July•2020