Global LNG Outlook 2017

BNEF’s long-term forecast of LNG markets to 2030.

BNEF’s long-term forecast of LNG markets to 2030.

Overview

Our Global LNG Outlook (GLO) examines the latest trends in the global Liquefied Natural Gas (LNG) market, identifies the key drivers to changing market dynamics, forecasts the world’s LNG demand and supply to 2030, and explores their impact on LNG contracts and pricing.

This edition of the outlook reviews the market development in 1H 2017, and updates our long-term forecast on global LNG demand and supply to 2030. We take into account various factors which include, but are not limited to, the following: power market liberalization, cost competition between gas and other energy sources, infrastructure development, contracts and pricing mechanisms, buyer & seller’s commercial behaviors, and carbon tax and carbon emission targets.

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“Asia will continue to be the center of gravity of the world’s LNG demand, importing over 70% of the fuel until 2030. However, from 2025, China, India and ASEAN (Southeast Asia) together will import more LNG than Japan, Korea and Taiwan combined.”

Highlights

1

Global LNG demand growing fast amid low LNG prices

Global LNG consumption will reach 280MMt this year, showing a robust 8.8% growth from 2016. A 3.8% average annual growth until 2020 will push demand to 314MMtpa.

2

Overcapacity until 2024, but shortfall thereafter

As the export capacity surges to 400MMtpa by 2020, overcapacity will peak at 87MMtpa in that year. Very few pre-final investment decision (pre-FID) projects will move ahead before 2020, leading to a tightly balanced market by 2024.

3

Lower volumes and slopes, rising renegotiations in LNG contracts

Only 5.7MMtpa of LNG term contracts were signed in 1H 2017, a record low since 2010. Average slopes are also down to ~13%. Buyers continued to push for renegotiations of old contracts with higher prices and no destination flexibility.

4

LNG prices under pressure from contracted resalable LNG until mid-2020s

In summer 2017, spot LNG was above $5/MMBtu in Asia – a recovery supported by a stronger oil price. Given higher seasonal demand in the winter, spot prices will bounce up in 4Q 2017. Until 2020, spot prices will be kept in check due to an unavoidable oversupply.

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