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Global LNG Developments in 2010- Some key points:

EIA reported that energy prices going up in 2010:

  • Natural gas prices are expected to rise through 2011, the US EIA said in its short-term energy outlook on 12-Jan as a steady economic recovery in the US is expected to fuel a rise in demand in 2010 and 2011.

  • Due to the expected declines in gas production and imports this year, the US EIA increased its first-quarter Henry Hub spot price forecast by 21%, to $5.56/MCF. EIA predicted a full-year 2010 average price of $5.36/MCF up 16%, from its previous outlook report published in December and $1.30/MCF higher than the 2009 average of $4.06/MCF. The agency said it expects gas prices to continue rising in 2011, averaging $6.12/MCF.

  • US gas production rose 3.7% in 2009 despite a 59% downturn in the working gas rig count from September 2008 to July 2009, EIA said. It attributed the modest growth to the enhanced productivity of new wells in unconventional plays—but it predicted steep declines from initial levels at those same wells, which should contribute to a 3% drop in overall 2010 production.

  • Gas consumption is predicted to be almost unchanged this year, the US EIA said. “Higher natural gas prices in 2010 are expected to cause a 2.8% decline in gas consumption in the electric power sector in 2010, which will offset growth in the residential, commercial and industrial sectors,” The US EIA added.  The weak economy cut gas use by 1.5% in 2009, however, the agency predicts that gas demand will remain nearly steady through 2011, when it is expected to rise just 0.4%.

On 10 Feb. 2010, the US EIA predicted that LNG imports in 2010 as a whole are expected to rise versus 2009, as production comes online in Russia, Indonesia, Yemen and Qatar. However, imports are seen falling in 2011 as demand in Europe and Asia picks up and helps suck some cargoes away from US market.

EIA: US LNG imports may increase 42% in 2010

  • The US LNG imports may rise 42 percent in 2010 to approximately 1.76 BCF/D (12.8 MMT/Y), the country’s energy information watchdog, EIA said in its monthly short-term energy outlook (STEO) in April. However, the latest estimate for 2010 imports was 2.2 percent lower than the previous forecast when the EIA had projected imports of 1.8 BCF/D (13.1 MMT/Y).

  • While the EIA expects the LNG imports to increase by about 3.65 MMT this year over last, the failure of global demand to keep pace with increased global supply could lead to even higher US LNG imports than currently forecast, the EIA said.  The EIA has also estimated that the US LNG imports in 2011 may rise 2.8 percent to 1.81 BCF/D (13.2 MMT/Y).

  • According to the STEO, the Henry Hub natural gas spot price is expected to average $4.44/MMBTU this year. Though considerably less then the average price of $5.17/MMBTU projected for 2010 in last month’s STEO, this projection is $0.49/MMBTU more than the 2009 average.

  • Total natural gas consumption is expected to increase by 1.9 percent to average 63.8 BCF/D in 2010. During the first quarter of 2010, cold weather contributed to year-over-year increases in natural gas consumption in the electric power sector. In addition, industrial consumption increased as economic conditions improved. The STEO predicts total natural gas consumption will decline by 0.6 percent in 2011, as the predicted return of near-normal weather will likely reduce residential and commercial consumption. Conversely, the STEO predicts industrial consumption will increase by 1.7 percent in 2011, likely as a result of continued economic growth.

  • The US marketed production is expected to increase by roughly 1 percent to 60.9 BCF/D in 2010 and decrease by 0.7 BCF/D or 1.2 percent in 2011.

LNG excess capacity may be removed by 2020:

World’s LNG excess production capacity may plunge to less than 5 percent in 2020 from about 30 percent last year because strong demand for LNG over the coming decade, creating room for supplies from proposed project in Australia, Sanford C. Bernstein & Co. said on 12-Jul. “While there is an excess of liquefaction capacity following the startup of Qatar LNG projects, this is only a temporary phenomenon.”

LNG spare capacity was about 15 percent in 1998 then declined to less than 5 percent in 2003, it may rise to about 15 percent in 2017 before declining again to less than 5 percent in 2020, according to Bernstein.

 

On 20 Jul., Bentek Energy consulting company said that the prompt-month NYMEX natural gas futures contract is unlikely to average higher than $5/MMBTU in any year between 2010 and 2015 as the result of a long-term shift in market fundamentals.

Bentek has predicted an average price of $4.66/MMBTU over the five-year period, including a peak of $4.92/MMBTU in 2013.

   

 

 

 

 

 

 

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