IEA: Global LNG oversupply to impact trade patterns, keep prices low

[Smokin Joe]

IEA: Global LNG oversupply to impact trade patterns, keep prices low

http://www.ogj.com/articles/2016/06/iea-global-lng-oversupply-to-impact-trade-patterns-keep-prices-low.html?cmpid=EnlDailyJune82016&eid=288225004&bid=1427862
 HOUSTON, June 8
06/08/2016
By OGJ editors

New LNG supplies are coming online just as demand growth in some major markets are weakening, leading to major shifts in global natural gas trade patterns over the next 5 years, the International Energy Agency said in its 2016 Medium-Term Gas Market Report. IEA’s report assesses global gas trends and provides a detailed analysis of global gas demand supply and trade development through to 2021.

“We see massive quantities of LNG exports coming online while, despite lower gas prices, demand continues to soften in traditional markets. These contradictory trends will both impact trade and keep spot gas prices under pressure.” said Fatih Birol, EIA executive director. The combined factors of cheaper coal and continued strong renewables growth were blocking gas from expanding more rapidly in the power sector, Birol added.

The slowdown in Asian gas demand has intensified, prompting a rare decline...

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http://www.ogj.com/articles/2016/06/iea-global-lng-oversupply-to-impact-trade-patterns-keep-prices-low.html?cmpid=EnlDailyJune82016&eid=288225004&bid=1427862

[IsailedawayfromFR]

Makes it tough for stranded gas to find markets.

If you ain't already built the LNG plant, any new one will be likely insurmountable to get going.

[Smokin Joe]

Makes it tough for stranded gas to find markets.

If you ain't already built the LNG plant, any new one will be likely insurmountable to get going.

It depends. Majors may build it anyway, taking advantage of slumps in infrastructure construction to obtain better bids, and knowing that the future will likely see a resurgence in demand.

It is a gamble, to some extent, but what isn't. If you look at pre (last) boom Exxon/Mobil, they continued to drill and explore right through the slump in demand and prices, and had the product to deliver when prices spiked, making back a great ROI over the long haul. (A few acquisitions didn't hurt, either.)

The question is one of how much can be tied up in inactive or subcapacity infrastructure for how long, and as always, the geopolitical questions.

Then, too, this could affect Asian Markets, depending on the outcome:  Inpex spuds exploration well offshore southern Japan http://www.ogj.com/articles/2016/06/inpex-spuds-exploration-well-offshore-southern-japan.html

If Natural Gas or oil are found there, that could impact Asian markets.

[IsailedawayfromFR]

It depends. Majors may build it anyway, taking advantage of slumps in infrastructure construction to obtain better bids, and knowing that the future will likely see a resurgence in demand.

It is a gamble, to some extent, but what isn't. If you look at pre (last) boom Exxon/Mobil, they continued to drill and explore right through the slump in demand and prices, and had the product to deliver when prices spiked, making back a great ROI over the long haul. (A few acquisitions didn't hurt, either.)

Chevron is reeling with its last LNG project Gorgon which just came on line this year after taking 40 years since discovery to market, and 10X cost.  And the capital outlay is sunk.  Caused them to hold off on Wheatstone.

Exxon, a company I know well after working DW for them, is unique.  It runs its business independent of cycles and could very well do what you suggest.  In my mind, it is by far the best O&G company in this country.

The question is one of how much can be tied up in inactive or subcapacity infrastructure for how long, and as always, the geopolitical questions.

Then, too, this could affect Asian Markets, depending on the outcome:  Inpex spuds exploration well offshore southern Japan http://www.ogj.com/articles/2016/06/inpex-spuds-exploration-well-offshore-southern-japan.html

If Natural Gas or oil are found there, that could impact Asian markets.

That is exploration which has a very low COS.  Sorta like the Korean gas play I participated in that did not pan out.  Inpex, being a Japanese company I worked with in Indonesia, has a vested interest to try to make a gas play near its homeland.