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Although China will continue to raise its liquefied natural gas (LNG) imports this year, the 2019 rise in the world’s key LNG demand growth market may not be enough to absorb all the new supply coming on stream over the next months.
According to analysts at this week’s LNGgc Asia conference in Singapore, new demand this year would be lower than the expected new supply.
Jason Feer, head of business intelligence at Poten & Partners, said that the company expected 33 million tons of new global LNG supply to hit the market this year, while demand is seen growing by just 16 million tons, Reuters columnist Clyde Russell writes.
China will still see its LNG demand growing, but at a slower pace than the growth between 2017 and 2018.
China’s LNG imports reached a new record-high in January 2019, but as the winter heating period is coming to an end in mid-March, imports are expected to drop.
At the same time, oversupply in Asia’s LNG market resulted in Asian spot LNG prices dropping again last week to the lowest since September 2017.
China breakneck demand surge of the past two years is expected to slow down this year as Beijing is determined to avoid severe shortages by boosting pipeline connectivity, building more storage and import terminals, and raising domestic natural gas production.
“Economic slowdown, a more considered approach on coal-to-gas switching and increased domestic infrastructure availability will mean LNG demand will slow in 2019, from the 40-45% growth we have seen in 2017 and 2018,” energy consultancy Wood Mackenzie said in its 2019 LNG outlook in early January.
“But China will still grow at around 20%, by far the largest source of LNG demand growth in the global market,” according to WoodMac.
More LNG supply will be coming online this year, while a record LNG volume could reach final investment decision (FID). According to Wood Mackenzie, this year could be a record year for LNG projects approved, with more than 60 mmtpa of capacity likely FID. This would be well above the previous record of 45 mmtpa sanctioned in 2005 and triple the 21 mmtpa projects sanctioned last year.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.