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LNG glut may flip to deficit

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LNG Industry,

According to the latest Bloomberg report, the global glut plaguing LNG markets may start to dwindle in five years, threatening to spur a deficit equivalent to twice the output of leading producer Qatar.

New projects are needed to fill the shortfall, with demand for the super-chilled fuel forecast to double in the 20 years to 2035, Cedigaz has said in its LNG Outlook. Buyers in Asia are boosting use of the fuel at a staggering pace.

While plants currently in operation or being built will add to global oversupply, aging facilities and shrinking resources in some areas mean capacity will start declining after 2021. That is a boon for companies from Royal Dutch Shell Plc to Tellurian Inc. and Novatek PJSC looking to invest in new production in the next decade to meet demand.

The US shale boom will make the country the biggest LNG producer by the end of the period, according to the Cedigaz report. Output will end in some nations such as Trinidad and Tobago.

Global LNG capacity is expected to peak at 387 million tpy by 2021 – 2022 from 288 million t this year at existing or under-construction plants, Cedigaz said. Trinidad and Tobago, the world’s ninth-biggest producer, will stop production in 2029. The Atlantic LNG venture in the Caribbean nation has already curbed output and cut its workforce due to feed-gas shortages.

Algeria, Indonesia, Malaysia and even Australia, which next year will add more capacity than any other nation, will see declines in output by the end of the next decade. By 2035, new LNG projects will be required in all regions, with additional capacity needs estimated at 154 million t, according to the report. Qatar produces 77 million tpy.

While the oversupply lingers, increases in Australian and US capacity will shake up the list of the biggest producers. The outlook is based on stable production at Qatar, though the nation’s decision to boost output by 30% to 2024 could change the game.

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