In 2014, the LNG year was somehow a replica of the previous one as it was characterized by rising Asian demand, decreasing European demand and a high price differential between the two biggest LNG markets.
In 2015, as the trade data of Q1 show, the dynamics are likely to be different. First data show that the pressure on the Asian market is falling due to lower demand and growing production in the Pacific basin. In addition, gross imports are increasing in Europe while the re-export business is collapsing. Elsewhere in the world, the LNG industry continues to develop, as new projects keep coming on stream, Cedigaz said in its Q1 estimates and outlook.
In Asia, a significant decline in LNG prices marked the first three months of 2015. As a consequence of the drop in oil prices and softening market conditions, average import prices dwindled in all importing countries.
Along with the softening of market conditions in Asia, the gap between Asian LNG spot prices and European LNG spot prices has narrowed in Q4 2014 and Q1 2015. Reuters’ assessments of Japan LNG spot price and UK LNG spot price show that the Asian premium has significantly reduced. After three years of high price differentials, the latter is now at the pre-Fukushima levels. While the Asian premium averaged $1.5/mmbtu in 2010, it reached $1/mmbtu on average in Q1 2015 against $3.1/mmbtu in Q4 2014 and $4.5/mmbtu in Q3 2014. In February 2015, UK LNG spot price was even higher than Asian LNG price by $0.44/mmbtu at $7.45/mmbtu.
In the rest of the world, the emergence of new players is highlighting the growing complexity of the global LNG market. Pakistan joined the group of LNG importers and the Excelerate Exquisite, which operates both as a regasification vessel and as a LNG carrier, delivered 0.2 million tons of LNG from March to May to the South Asian country.
Egypt received its first shipment from Qatar in early April after it sent its last cargo of domestically produced LNG in October 2014. In late May, Jordan also received its first cargo of chilled gas from Qatar. In February 2015, the reconverted Arun LNG terminal (Indonesia) also received its first shipment from the Indonesian Tangguh LNG plant. In H2 2015, additional capacities will be added in already-importing countries, including France, Spain, Chile, China, Japan and South Korea. In Poland, the Polskie LNG project is suffering delays in construction and first commercial operations are now not expected to begin before 2016.
“The diversification of importers is set to continue in the coming years, as proposals thrive in the first months of 2015, including plans in Ghana, Senegal, and Myanmar. In the meantime, shipping managers are ordering more FSRU’s which confirms the development trend of the technology,” Cedigaz said.
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LNG World News Staff; Image: BP