NGI The Weekly Gas Market Report / NGI All News Access

Analysis: Supply to Drive More LNG to the U.S.

U.S. imports of liquefied natural gas (LNG) in 2010 will be more than double what they were in 2009, according to research by PFC Energy, and they'll grow even more in 2011. But the growth will come from LNG looking for a home, not because of the attractiveness of the U.S. market, the firm said.

"For 2010 and 2011, Henry Hub [prices] will remain depressed as will [prices at the United Kingdom's] NBP [National Balancing Point] -- the former due to both domestic supply pressures and LNG inflows into the United States, the latter mostly due to LNG," PFC said in a research note released last Thursday.

In other words, the United States will remain a market of last resort to global LNG players. "...[T]his year suppliers have shown an aversion to sending their gas to the United States, which has preserved most of the U.S. market at the bottom of the pecking order. At the same time, PFC Energy forecasts a growth in LNG imports [to the United States] from an overall level of 1.4. Bcf/d in 2009 to 3.5 Bcf/d in 2010 and 4.64 Bcf/d in 2011, mainly as a result of the global imbalance between supply and demand, which will lead to more LNG being sent to the United States," the firm said.

LNG supplies declined in the first half of this year but increased during the third quarter and showed a year-to-date growth of 1.5%, PFC said. Exports from Nigeria, Algeria and Indonesia declined; most other countries kept exports flat, but Russia, Australia, Norway, Trinidad and Qatar increased exports as new projects came online and problems were resolved with existing trains.

More abundant global LNG supplies in the coming years would be good news for Spain's Repsol, which recently opened its Canaport LNG terminal for business near Saint John, NB. While gas sendout from the plant has been modest at about 200 MMcf/d, plans are to grow that figure to 600-700 MMcf/d next year based in part on the growth of global LNG supplies (see NGI, Oct. 19).

The disparity between oil-linked LNG prices in Europe and Asia and natural gas-linked prices in North America is expected by PFC to continue. "Mainly there are insufficient pressures to bridge this gap -- and despite grumbling about abandoning oil indexation, all new LNG contracts in Asia are pegged to oil, showing a long-term commitment to that pricing mechanism [see NGI, May 25]," the firm said.

©Copyright 2009 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus