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23 April 2024

LNG markets likely to be over supplied in 2009

By Shashank Shekhar

Liquefied natural gas (LNG) markets may become over supplied in 2009 and 2010 as an additional 100 million tn/per annum production capacity comes on-stream in countries such as Qatar and Australia, a New York-based agency said in new report.

Energy Intelligence (EI), in its 'World Energy Review', said developing countries will become bigger consumers of the clean fuel leaving behind highly industrialised and energy hungry economies like Japan and South Korea.

"The supply-demand balance is poised to turn again in the medium term, as supply project bottlenecks are cleared and over 100 million tonnes per year of new supply – a 50 per cent increase – floods the market," EI said in its report.

"The import balance is shifting from the industrialised Asian economies to developing ones, and the United States and Europe are poised to regain lost import shares," it added.

Qatar, which is currently producing 30 million tonnes per annum of LNG, plans to increase it to 77 million tonnes per annum in 2010.

Its LNG production capacity is leaps ahead of other gas majors Russia and Iran. It recently edged past competitors such as Indonesia, Australia and Malaysia.

Besides Qatar, there are also reports of projects in Kuwait and Australia becoming operational in 2010.

"Suppliers in Africa, the Middle East and Europe are threatening the dominance of Asia," EI said.

According to an estimate by Energy Information Agency of the US, world's natural gas consumption is expected to increase from 105 trillion cubic feet in 2005 to 158 trillion cubic feet in 2030. Another estimate by energy analysis agency Future Energy sets 2.4 per cent as the rate for growth in demand for natural gas in the coming years. The report comes close on the heels of at least two major projects – one in Taiwan (a storage terminal) and the other in Qatar getting delayed.

EI said delays in global projects, coupled with soaring demand for gas, are contributing to short-term LNG supply shortages and escalating prices.

"Import terminals, and the LNG fleet, are multiplying more rapidly than export facilities, as purchasers seek to position themselves in the new market, but supply shortfalls mean many face severe under-utilisation in their early years."