US upsurge in LNG imports

Wood Mackenzie report predicts increased LNG trade to the US.

Prediction will come as excellent news to the region's LNG producers.
Prediction will come as excellent news to the region's LNG producers.

Energy research and consultancy firm Wood Mackenzie has predicted “year-on-year” growth for LNG imports into North America from 2009 to 2014.

The news that LNG imports will rise despite the domestic shale gas resource and current recession will come as excellent news to the region’s LNG producers.

“In light of recent history, and the longer term outlook for growth in domestic US shale gas, many industry analysts and commentators have been suggesting that the outlook for LNG imports into North America is bleak,” said Murray Douglas, North American LNG analyst ay Wood Mackenzie.

“While it is fair to say that regas capacity has undoubtedly been overbuilt, the medium-term outlook for LNG in North America is not as dire as other commentators are suggesting, despite the success in developing shale gas.”

Wood Mackenzie has predicted there will be a rise in imports from 1.7 bf3/d in 2009 to 4.2 bf3/d by 2014. The report has also stated that additional LNG volume will flow due to the 82 million tpa new liquefaction capacity coming on-stream in the next three years.

“The US can easily accept large volumes of unallocated LNG as required due to its size, liquidity and significant regas and storage capacity. Some of this relatively low cost new liquefaction capacity will compete with domestic shale gas resources in the US market.  This will suppress price and in turn delay some higher cost domestic developments,” said Douglas.

“We predict further upside to the North American forecast if there is a sustained period of low oil price. Under this scenario the report forecasts an increase in the attractiveness of the North American gas market to LNG suppliers as the oil-linked gas prices in European markets soften and Asian buyers switch from gas to oil resulting in more LNG on the market.”

Wood Mackenzie’s report concluded that with the softening of global gas demand, the LNG market may be oversupplied over the near term. This is therefore expected to lead to increased flows of LNG to the US as it plays its role as the global sink for LNG.

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