Global gas prices could get a lift around 2014 when demand recovers and the delay of liquefied natural gas (LNG) liquefaction projects limits the amount of LNG available, according to Ziff Energy Group.
Additionally, emerging LNG import markets will place an added draw on global supplies once new regasification terminals begin operation around 2013, the firm said in a new report on LNG supply availability to North America through 2020.
“Right now [U.S.] prices are higher than prices in Europe, so you’re seeing more [LNG] deliveries to North America. Going forward there’s a lot of LNG coming on, liquefaction, coming on through the next two to three years, but then the pipeline for new projects is going to dry up, and that’s because a lot of the projects that are on the books, speculative projects, are in jurisdictions that are quite shaky. For instance, Iran, Nigeria, Russia,” Ed Kallio, Ziff manager of natural gas consulting, told NGI.
Liquefaction projects that are further along include those in Australia, Algeria, Indonesia and Papua New Guinea, Kallio noted.
In the near term, utilization of worldwide regasification capacity will increase due to the amount of liquefaction capacity coming online, he said. “After that if the U.S. market has to chase worldwide LNG to bring it to North America, two things will happen. We will have to pay more of a world price for gas in the U.S. If we don’t pay that price, then regas capacity will remain relatively empty.
“Gas could get tight again for the last five years over the next decade.”
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