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Wood Mackenzie: where are all the LNG project postponements?

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LNG Industry,

Following a new global gas analysis, Wood Mackenzie has commented that the number of LNG projects proposed to take a Final Investment Decision (FID) has not reduced significantly, despite the global LNG demand looking increasingly subdued. This is in contrast to the 45 upstream oil and gas projects which have been postponed a FID in 2015 so far. The company has said that if there are no postponements, the market could see an additional 100 million tpy of LNG sanctioned in the next 6 - 18 months.

“With the LNG market facing a wall of new supply just as China’s gas demand growth has faltered, it is surprising how few new projects chasing a FID have been postponed,” said Noel Tomnay, Vice President Global Gas and LNG Research for Wood Mackenzie.

Tomnay added: “Global LNG supply is presently around 250 million tpy and there is a further 140 million tpy under construction. Recognising that the global market will struggle to absorb such a large supply uptick, for some time now we’ve been forecasting a soft global market […] China's LNG import commitments are set to rise by 17% y/y between 2015 and 2020, from 20 to 41 million tpy but China will struggle to take all this LNG so quickly. In contrast, China's LNG imports fell by almost 4% y/y in the 1H15, as a consequence of subdued industrial output and fuel competition, which was driven by relatively low priced oil.”

For Wood Mackenzie, the market opportunity for new LNG into Asia will not open up significantly until after 2022, with the key implication being that the new projects FIDs are not required until 2017. Presently, companies are continuing to push ahead with their new LNG projects which Wood Mackenzie warns will cause FID on some 50 million tpy of LNG from the US and a further 50 million tpy from outside the US within the next 6 - 18 months.

“Development of even half of this proposed supply could prolong the Asian oversupply to 2025. Wood Mackenzie's view is that the global LNG market does not need all this LNG at the pace proposed and, as companies confront this reality, a raft of project postponements will follow," Tomnay stated. 

Edited from press release by

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