Asian LNG surplus to rise
China
BEIJING, December 4, 2015 – Asia’s LNG surplus is set to increase in 2016, as new production comes to market and demand from major importers such as Japan, South Korea and China lessens.
While analysts indicate that new consumer demand may counterbalance declining usage from established buyers, fresh supply will offset overall orders. Accordingly, a low gas price is expected for the coming years.
“From having been an import basin, Asia will next year be going to have excess supplies and worse so in 2017,” David Hewitt, co-head of global oil and gas equity research at Credit Suisse was reported as saying by Reuters.
While the majority of supply from Australia’s 13 new LNG supply trains will be delivered to term buyers, commissioning cargoes over the next two years of 14 million-15 million tonnes will be directed to the spot market, weighing in on prices.
Hewitt told Reuters that he expects Asian LNG spot to fall to “eye-watering low” levels of below $5 per million British thermal units in early 2016.
Asian spot LNG prices LNG-AS have already dropped by almost two-thirds since 2014 to around $7.30 per million British thermal units.
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