Global liquefied natural gas prices might see new lows in next five years due to oversupply in the market, according to a Wood Mackenzie report released on Tuesday.
'The LNG market is facing another oversupply which is likely to be deeper and will persist for some years,' Noel Tomnay, the company's head of global gas and LNG research said, referring to increase of supplies coinciding with the slowing demand in China.
Annually, 130 million tons per year of new LNG will be additionally introduced to the market in the coming five years more than 2008-2010 period, when Qatar increased the LNG production by 50 million tons per year leading low prices.
Asian LNG prices will be below European prices between 2017-2019 at their weakest as the LNG prices in Europe will dip in 2020, according to the consultancy's report.
'At periods of severe oversupply, Russian gas supply behavior will again be key to gas price formation in Europe – and this time in Asia and even the US too,' Tomnay said as major producers could retract gas from market to balance prices.
'It is likely that output from some high cost gas will be curtailed but protectionist measures will restrict China's willingness to fully replace indigenous gas with lower priced LNG, dampening the potential supply response,' he said.
By Furkan Naci Top
Anadolu Agency
furkan.top@aa.com.tr