PIRA: LNG balances continue to tilt toward supply overhang

NYC-based PIRA Energy Group said it believes that liquefied natural gas supply/demand balances continue to tilt toward a major supply overhang.

While the length in the market has not led to lower spot prices in the past 30 days, the methods required to dispose of incremental LNG supply are becoming more creative, according to PIRA.

European Gas Price Scorecard

PIRA said it has argued for some time that this year’s leisurely attitude toward storage accumulation is based on three principles and it believes these principles are still holding in place.

One is that at least 15 years of gas demand has been lost to a combination of power sector deterioration (renewables), industrial migration to North America (lower gas prices), and efficiency gains (E.U. policy mandates) in the R/C sector.

These losses have made higher storage injections somewhat superfluous for a market that is not growing and has shown over consecutive winters that the amount of incremental gas demand per heating degree day is dropping.

Central Asian Gas Major Looks to Ramp Up Gas Usage

Turkmenistan is currently implementing several major projects aimed at increasing the production and export of natural gas, as well as the projects for deep processing of gas, the country’s Ministry of Oil and Gas Industry and Mineral Resources said July 23.

The total cost of these projects is $20 billion. Moreover, these projects include the second stage of Galkynysh field’s development, construction of Turkmen sector of the fourth branch of Turkmenistan-China gas pipeline with the total capacity of 30-bcm of natural gas, a plant for polyethylene and polypropylene production in Balkan province, as well as a plant for producing synthetic gasoline from natural gas in Ahal province.

Image: BP