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Petronas expects balance in oversupplied LNG market in 2023

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Reuters are reporting that Petronas expects the global LNG market to remain oversupplied until as late as 2023.

Rising LNG production over the last two years, mainly from Australia and the US, has exceeded demand and depressed prices. Asian spot LNG prices LNG-AS are now down by around 70% from early 2014.

Petronas, as the company is better known, only last month scrapped a proposed US$29 billion LNG terminal project in western Canada, saying market conditions made the project economically unviable.

Petronas is the sole manager of Malaysia's oil and gas reserves, making it the world's third-biggest LNG exporter after Qatar and Australia.

The company is now looking for new buyers for its LNG output, beyond its long-time customers in Japan and South Korea.

South Asia is emerging as the new hot spot for LNG, with Pakistan and Bangladesh set to join India as major consumers, helping to eat away some of the global oversupply.

Petronas started up Train 9 at its Bintulu export terminal this year and commissioned the world's first FLNG unit, bringing Malaysia's annual LNG capacity to 32 million t.

Petronas, like other oil majors, has taken a hit from lower oil prices. Brent crude oil prices LCOc1 are at less than half the levels of mid-2014.

Despite the low-price environment, lower operating expenses, job cuts and project rollbacks helped the company post a profit increase in 2016.

Earlier this year, Petronas said it maintained a conservative outlook for 2017 and that it will continue to pursue lower costs as oil prices are likely to remain uncertain.

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