Page 11 - GLNG Week 26

GLNG COMMENTARY GLNG

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

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

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

Week 26 03•July•2020 www. NEWSBASE .com P11