In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.
Let’s take a look.
1. China’s appetite for LNG not as big as expected
- Japan is by far the largest importer of LNG in the world, but there isn’t big potential for growth. LNG exporters are betting overwhelmingly on China.
- China’s economy is slowing, and so is its demand for imported LNG. It will only accept 77 percent of the cargoes it contracted for in 2015. It will resell the rest, adding further supply on the spot market.
- With an onslaught of new LNG capacity expected – major projects are coming online in the U.S. and Australia (more on that below) – LNG spot prices could remain depressed for the next few years. Worldwide LNG supply is expected to grow by the equivalent of 38 percent of 2014 demand over the next three years.
- Spot prices for JKM – the Asian benchmark – are down from ~$20/MMBtu in early 2014 to less than $7.50/MMBtu for January delivery.
2. LNG export capacity set to explode in Australia and U.S.
- A flood of LNG export projects began construction a few years ago as JKM prices skyrocketed.
- Prices are already low on slower Chinese demand and rising supply, but several major projects,…