Global LNG imports in 2017 increased by nearly 10%, the highest annual growth rate since 2010, reaching 289.8 million mt, while expectations of an LNG surplus failed to materialize as rising imports into China contributed to balancing the market, an industry report showed.
Given significant demand growth prospects and the recent slow-down in FIDs, the risk of a potential tightening of demand and supply must not be minimized for the medium term, the International Group of LNG Importers’ 2018 report showed.
Spot LNG import, defined by GIIGNL as LNG deliveries which occurred less than three months from the transaction date, reached approximately 20% of total volumes delivered in 2017, representing about 59 million mt of LNG.
Spot imports were facilitated by LNG contracts with destination flexibility, by increased contracts for portfolio trade and by the growing volumes handled by traders. Asia received about 60% of spot LNG (35.4 million mt), followed by Europe (9.0 million mt), the Americas (8.6 million mt) and the Middle East (5.5 million mt).
The largest growth in spot imports came from China and South Korea, which imported 21% and 22%, respectively, of their LNG supplies on a spot basis last year.
The rise of spot and short-term volume, which combined accounted for 27% of total trade, was underpinned by the development of US exports, which accounted for 10.4% of LNG volumes delivered under contracts of four years or less in 2017.
Mirroring the 2016 situation, spot LNG prices followed a seasonal profile last year, although the increase in the last few weeks of 2017 was stronger than a year earlier because of much higher than expected Chinese demand, and colder than normal weather in northeast Asia.
The main additions to LNG supply came from Australia and the US, where production from trains commissioned in 2016 continued to ramp-up, and a total of five new liquefaction trains — Gorgon Train 3, Wheatstone Train 1 in Australia, Sabine Pass Train 3 and Train 4 in the US and Yamal LNG Train 1 in Russia – started-up in 2017. Malaysia’s Floating LNG Satu, the world’s first FLNG project, also began producing during the year.
Most of the demand growth occurred in Asia, where LNG imports grew by 19.6 million mt. Mainly influenced by energy policy orientation in China, Korea and Taiwan, demand from northeast Asian buyers experienced a strong rebound, which was not the case at the beginning of the year.
The LNG industry experienced an accelerated change in 2017. Driven by US LNG exports, the significant supply build-up on the horizon could further transform our industry and bring on new evolutions, including a rise in market liquidity and flexibility, GIIGNL president Jean-Marie Dauger said.
“New commercial instruments are implemented to adapt to the new realities of the markets as some traditional ones – such as destination restrictions – tend to be progressively shelved. As aggregators and traders take a greater share of the market, the break-up of the traditional value chain is gathering pace,” Dauger added.
Source: PlattsPrevious Next