LNG Supply Won’t Become Flood in ’16 Amid New Demand, Total Says
2015-10-16 12:46:59.954 GMT
By Anna Shiryaevskaya
(Bloomberg) -- Liquefied natural gas plants from Australia to the U.S. won’t deluge the world with fuel next year as the biggest annual capacity increase will be partly absorbed by new demand from the Middle East to Latin America, according to Total SA.
LNG producers will probably add 50 million metric tons of capacity next year, equivalent to a fifth of current global demand, according to Sanford C. Bernstein & Co. Sliding prices for the super-chilled fuel are spurring consumption of the gas in nations such as India, where imports rose to a record in July, Laurent Vivier, Total’s president for gas, said in an interview.
In Australia, production increased this year as Queensland Curtis boosted output and Gladstone LNG started, while Cheniere Energy Inc. is planning the startup of its Sabine Pass terminal in Louisiana this quarter. Europe can expect 26 million tons more LNG to arrive in 2016, with more expected later this decade, according to Energy Aspects Ltd., a London-based consultant.
“It’s going to be gradual, some will come to Europe, it’s undeniable,” Vivier said at a conference in Paris Thursday. “But by being gradual it will create some pockets of new demand as well, which will help to absorb this mismatch in terms of supply and demand in the coming five years.”
LNG for delivery to northeast Asia in four to eight weeks has tumbled by about two-thirds since February 2014 to $6.80 per million British thermal units, according to New York-based Energy Intelligence Group. Demand slowed in key consuming countries such as Japan, South Korea and China.
Output Increase
Cheniere’s Sabine Pass will add 4 million tons of LNG per year when the first train becomes operational, a fraction of the global LNG market of 260 million tons, Vivier said. Cheniere will have six trains, which are scheduled to come online every six to nine months through 2018. Gladstone LNG, in which Total holds 27.5 percent, will produce 7.2 million tons a year once at full capacity.
“I am not sure it will happen all in a big manner in 2016,”
Vivier said. “Some projects are starting, like Gladstone for us, but most of the U.S. wave is later.”
High demand is also expected in Latin America, the Middle East, and places such as the U.K. as lower prices encourage a switch to gas from coal, he said.
“Our terminal in Hazira has never been so full,” Vivier said, referring to the LNG import terminal in western India that it owns jointly with Royal Dutch Shell Plc. “It shows that there are some pockets in terms of flexibility, which are going to take advantage of low prices.”
To contact the reporter on this story:
Anna Shiryaevskaya in London at +44-20-3525-8247 or ashiryaevska@bloomberg.net To contact the editors responsible for this story:
Lars Paulsson at +44-20-3525-2759 or
Andrew Reierson, Rob Verdonck
