Just 18 months ago the liquefied natural gas (LNG) market was depressed, anticipating an extended period of oversupply. But things haven’t played out quite like that, and prices have staged a strong recovery.
The market may not be quite out the woods, as supply builds up next year potentially putting some downward pressure on prices. But, with 65 million tonnes per annum (mmtpa) of new supply needed to meet growing demand by 2025, 20 mmtpa more than we forecast a year ago. How have things turned round so quickly?
Demand has been firmer. Low prices drew buyers into the market after Asian LNG prices fell 75%. China began a buying spree that hasn’t stopped, spurred by the government’s initiative to improve air quality in its cities. The Paris Agreement of 2015 has hardened energy policy – European governments are accelerating a shift away from coal to the benefit of renewables but also gas. A new and diverse breed of countries has joined the traditional LNG buyers among them Pakistan, Bangladesh, Colombia, Jamaica and Panama. LNG has gone global in the downturn. Forbes