• 2 days Iraq Begins To Rebuild Largest Refinery
  • 2 days Canadian Producers Struggle To Find Transport Oil Cargo
  • 3 days Venezuela’s PDVSA Makes $539M Interest Payments On Bonds
  • 3 days China's CNPC Considers Taking Over South Pars Gas Field
  • 3 days BP To Invest $200 Million In Solar
  • 3 days Tesla Opens New Showroom In NYC
  • 3 days Petrobras CEO Hints At New Partner In Oil-Rich Campos Basin
  • 3 days Venezuela Sells Oil Refinery Stake To Cuba
  • 3 days Tesla Is “Headed For A Brick Wall”
  • 3 days Norwegian Pension Fund Set to Divest From Oil Sands and Coal Ventures
  • 3 days IEA: “2018 Might Not Be Quite So Happy For OPEC Producers”
  • 3 days Goldman Bullish On Oil Markets
  • 4 days OPEC Member Nigeria To Issue Africa’s First Sovereign Green Bond
  • 4 days Nigeria To Spend $1B Of Oil Money Fighting Boko Haram
  • 4 days Syria Aims To Begin Offshore Gas Exploration In 2019
  • 4 days Australian Watchdog Blocks BP Fuel Station Acquisition
  • 4 days Colombia Boosts Oil & Gas Investment
  • 4 days Environmentalists Rev Up Anti-Keystone XL Angst Amongst Landowners
  • 4 days Venezuelan Default Swap Bonds At 19.25 Cents On The Dollar
  • 5 days Aramco On The Hunt For IPO Global Coordinators
  • 5 days ADNOC Distribution Jumps 16% At Market Debut In UAE
  • 5 days India Feels the Pinch As Oil Prices Rise
  • 5 days Aramco Announces $40 Billion Investment Program
  • 5 days Top Insurer Axa To Exit Oil Sands
  • 6 days API Reports Huge Crude Draw
  • 6 days Venezuela “Can’t Even Write A Check For $21.5M Dollars.”
  • 6 days EIA Lowers 2018 Oil Demand Growth Estimates By 40,000 Bpd
  • 6 days Trump Set To Open Atlantic Coast To Oil, Gas Drilling
  • 6 days Norway’s Oil And Gas Investment To Drop For Fourth Consecutive Year
  • 6 days Saudis Plan To Hike Gasoline Prices By 80% In January
  • 6 days Exxon To Start Reporting On Climate Change Effect
  • 6 days US Geological Survey To Reevaluate Bakken Oil Reserves
  • 6 days Brazil Cuts Local Content Requirements to Attract Oil Investors
  • 7 days Forties Pipeline Could Remain Shuttered For Weeks
  • 7 days Desjardins Ends Energy Loan Moratorium
  • 7 days ADNOC Distribution IPO Valuation Could Be Lesson For Aramco
  • 7 days Russia May Turn To Cryptocurrencies For Oil Trade
  • 7 days Iraq-Iran Oil Swap Deal To Run For 1 Year
  • 9 days Venezuelan Crude Exports To U.S. Fall To 15-year Lows
  • 9 days Mexico Blames Brazil For Failing Auction

Breaking News:

Iraq Begins To Rebuild Largest Refinery

Alt Text

Is Oil About To Collapse?

WTI could be about to…

Alt Text

Nigeria Reforms Oil Sector To Draw New Investment

Nigeria has announced plans to…

Alt Text

Gulf Of Mexico Production Recovers After Recent Slump

Hurricane outages dominated the Gulf…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Is The LNG Glut Real?

Nat Gas Field

LNG prices have tanked over the past few years after a wave of new natural gas export capacity has come online in places like Australia and the U.S. However, despite fears that the LNG market would collapse under a massive glut of gas, the supply/demand balance for LNG is a lot tighter than expected.

A new report from Columbia University’s Global Center on Energy Policy argues that a group of about a dozen relatively small countries have popped up to buy some of those LNG cargoes, relieving the market of its expected glut.

On their own, each individual country is a bit player in the global market for LNG. Collectively, they only accounted for 3.3 percent of total LNG imports in the world in 2014, but they have taken on a majority of the growth in imports since then, accounting for 57 percent of the total increase in imports through September 2017. In other words, put together, these countries have added more LNG demand to the market than China, India and Taiwan did combined.

Below is a list of small but important new LNG importers, including their LNG demand over the past year.

• Kuwait: 3.6 mtpa

• UAE: 2.8 mtpa

• Thailand: 3.8 mtpa

• Indonesia: 2.9 mtpa

• Singapore: 2.6 mtpa

• Lithuania: 0.9 mtpa

• Pakistan: 4.0 mtpa

• Egypt: 6.7 mtpa

• Poland: 1.2 mtpa

• Jordan: 3.5 mtpa

• Jamaica: 0.3 mtpa

• Malta: 0.2 mtpa

The Columbia report argues that one of the essential elements that have allowed for this growth is the substantial increase in the size of the fleet of floating storage and regasification units (FSRUs), which are pretty much what they sound like: ships that can convert liquefied gas into gas that is ready for distribution and consumption.

Related: Musk’s “Hardcore Smack-Down” To Gasoline Vehicles

FSRUs can be moved around and have increasingly replaced the use of massive and incredibly expensive LNG import terminals. Building a new import terminal can take years, whereas contracting for an FSRU can mean gaining access to gas at a fraction of the time. FSRUs have “started to unlock an infrastructural bottleneck, compressing lead times and initial capital expenditures,” the Columbia report argues, facilitating “import project development in many countries that could not have supported traditional onshore regasification projects, effectively democratizing access to LNG imports.”

This practice has global implications. The rise of these small LNG importers has helped soak up additional cargoes that were added onto the global market, mainly from Australia and the United States.

The assertion that the LNG market is not, in fact, oversupplied flies in the face of conventional wisdom. Just days ago, the IEA published its annual World Energy Outlook, which contained a special focus on natural gas. In the report, the IEA argued that “[w]ith 140 bcm of LNG capacity still under construction, gas markets remain well supplied for the next few years,” before adding that “[b]y the mid-2020s, however, market over-capacity is absorbed by import growth. Investment in new capacity therefore is needed from 2020 onwards.”

Still, the Columbia report argues that the market isn’t really oversupplied today. Its authors look at the European market as evidence, which it describes as sort of “the world’s swing LNG buyer.” That is because Europe is a flexible buyer—it has the infrastructure to ramp up or down imports, and it also has competing sources of electricity generation, allowing it to lean on LNG when prices are competitive. Related: The Hidden Cost Of Electric Cars

As the swing buyer, what happens in Europe tends to offer clues into certain dynamics in the LNG market. For example, LNG imports into Europe plunged after the Fukushima meltdown, because Japan needed so much LNG, and European buyers balked at the higher prices.

The overall conclusion from the Columbia report is that the massive wave of new LNG supply did not show up in Europe in the past few years. Prices crashed from the new export terminals in Australia and the U.S., but European imports did not tick up. “The long-awaited LNG wave to Europe did not materialize, despite LNG imports into Japan, Korea, and China actually falling by 10 mtpa from early 2014 through the end of 2016,” the report concludes.

Why? The LNG cargoes didn’t materialize in Europe because the dozen small countries identified by Columbia University quietly bought up a lot of the additional supplies over the past few years. The 12 emerging markets have gone from importing negligible levels of LNG prior to 2014, to collectively importing just about the same volume of LNG as China.  

“Clearly, the LNG market was not as loose as many observers had expected,” the report’s authors concluded.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News