New LNG facilities to push down global prices, BV report says

In order to support international trade in natural gas, additional liquefied natural gas and FLNG facilities are expected to come online in the next few year, a report by Black and Veatch shows. 

The expected proliferation of new LNG facilities could drive down global prices and stabilize the market while increasing global production, the report says.

The most prominent trend in the market is the “desire to shift LNG contract structures” away from the traditional long-term contracts.

Increasing volumes of LNG supply coming to the market have seen the contract negotiations focus more on shorter terms.

“Due to production gains, the availability of uncommitted short-term supply has increased, and pricing structures are transforming to accommodate greater sourcing options,” BV said.

This, in turn, is benefiting the buyers that are taking advantage of the competition in the market and achieving lower costs for LNG.

The natural gas industry is expected to recover as global economic recovery is expected to boost LNG demand. It is also predicted that the current oversupply will be absorbed between 2021 and 2025 opening room for a new wave of supply.