PIRA Energy Group believes that India sees a weaker spot market for LNG. In the US, price-induced gas electric generation gains are starting to counter cool weather.
After steep LNG import declines in India last year and flat growth in H1, changes to the LNG import outlook may be in the offing in a much more attractive spot price environment. Last month India’s imports saw a relatively major boost of approximately 7 million m3/d after declines in the prior two months.
Irrespective of the temperature-driven fallout on gas burns, US gas-fired electricity generation has remained weak at the same time US supply growth is surprising to the upside. Such a backdrop has allowed regional prices to march lower in near lockstep with NYMEX futures. Even so, basis differentials outside of the Northeast have not substantively weakened. To the contrary, many points have exhibited relative strength in July. Irrespective of Henry Hub prices, upstream prices in Appalachia will remain decoupled from the benchmark.
Structural changes that could lead to an unprecedented increase in the call on US gas supply have become more visible recently. Underpinned by a decisive global competitive price advantage, PIRA foresees a gas-intensive US industrial renaissance, together with LNG exports, cross-border pipeline exports to Mexico and emergence of gas for transportation fuel, contributing to an approximate 18 billion ft3/d increase Lower 48 gas production by 2019.
North American gas buyers and sellers will both face unique challenges in the pursuit of opportunities in such a game-changing environment, largely underpinned by LNG export projects and the industrial sector, which will be led by the chemical industry. This report highlights recent commitments to support gas-intensive manufacturing that will be heavily concentrated in the US Gulf Coast region.
Source: PIRA Energy Group
Edited by Katie Woodward
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/07082014/pira-lng-analysis-on-india-and-us-1168/