The greatest amount of liquefied natural gas (LNG) regasification capacity being added worldwide this year is coming online in North America — where it’s needed least, according to analysts at Barclays Capital. Meanwhile, LNG cargo takes by Asian countries are poised for growth next year while some Asian countries will find their regasification capacity to be wanting.
“This year Canada and the U.S. are adding 4.8 Bcf/d of capacity, and another 3.1 Bcf/d is scheduled for 2010,” Barclays analysts wrote in a research note published Tuesday. “These facilities do not have firm contracts and will rely largely on spot or short-term contract purchases for supply. Strong growth of U.S. gas production has all but eliminated the need to import LNG at this time, and the bulk of the regasification terminals are standing idle in anticipation of better times.”
According to the analysts, the ability of Asian countries to receive LNG should increase next year by nearly 1.7 Bcf/d. “But not all Asian markets are alike,” they wrote. “Japan and Korea, long established as the leading buyers in the LNG space, both tend to vary purchases with the fluctuations in demand driven by economic and weather trends. In contrast, Chinese, Indian and Taiwanese LNG consumption is still constrained by available regasification capacity.”
Large additions to regasification capacity in Europe and the United Kingdom drove LNG takes to a record for the region this year. “European purchases grew by 1 Bcf/d as the continent rejected pipeline gas…By some estimates, pipeline supply to Europe may have dropped as much as 20% compared with last year.”
The analysts predicted that U.S. and European price benchmarks “will be strongly linked in 2010.” Europe will retain its premium to the U.S. market throughout next year.
“Our outlook for U.S. balances next year points to very limited ability of the U.S. to receive incremental LNG, and we expect regional price differentials to reflect this dynamic,” they wrote.
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