Global LNG demand set to tumble

PIRA Energy Group believes that the global demand for LNG is set to fall dramatically. In the US, a report from the EIA highlighted the market’s continued above-normal reliance on natural gas inventories. In Europe, PIRA believes there is no need to be concerned about a cut-off in gas flows through Ukraine.

Global LNG demand

Global demand of LNG is set to tumble from the start of April. PIRA also sees the emergence of weak signals from key counter-seasonal markets including Brazil and India. A strong round of seasonal maintenance, particularly in Qatar, will retain spot price floors.

Reliance on inventories

The EIA reported a withdrawal of 195 billion ft³ of natural gas in its weekly update, which fell short of consensus estimates of 200 billion ft³. However, the report highlighted the market’s continued above-normal reliance on inventories, with the stock draw coming in at roughly 50 billion ft³ above last year’s numbers, and approximately 100 billion ft³ more than the five-year average.

Ukraine impact?

PIRA remains relatively unconcerned about a cut-off in gas flows through Ukraine. The research group is even less concerned about a wholesale stoppage of Russian gas exports to Europe, even if EU or German-based sanctions were to emerge. The real concern for Ukraine itself is how the country will fare next winter.

Argentina’s energy subsidies

Argentina will gradually cut subsidies in half on utilities. The government will spend 2 - 2.5% of GDP on subsidies including water, natural gas and electricity. Currently, the government spends 4 - 5% percent of GDP on subsidies, paying nearly three times more to buy natural gas abroad than to produce it domestically.

Adapted from press release by Katie Woodward

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