BG Group: global LNG market outlook

According to the latest LNG market outlook from BG Group, 2015 will be marked by increasing volatility, as new waves of supply start to add volume and new markets start to open up.

New supply

Commenting on the release of the company’s Global LNG Market Outlook, Andrew Walker, VP of Global LNG, said: "After four years of flat supply we are entering a period of supply growth. 2014 marked the start-up of a new wave of supply from Australia. This will be joined by the first volumes from the US Gulf of Mexico around the end of 2015. This new supply will be absorbed by continued growth in Asian demand, together with the creation of up to six new markets in 2015, further diversifying the LNG trade and opening up new sales opportunities.

Asian impact?

"While we see good growth in LNG imports into Asia in 2015, key influences that will affect demand include the rate of return of Japanese nuclear power-plants, economic growth rates for China and South Korea, as well as when the new markets begin importing. Over the longer-term BG Group continues to expect LNG trade worldwide to exceed 400 million tonnes per year by 2025, representing an annual growth rate of around 5% – almost twice the rate of expected growth in global gas consumption."

Volatile market

The industry expects five new liquefaction trains and one FLNG production facility to start-up in 2015. However, Walker noted: "These will be towards the end of the year limiting incremental supply in 2015 to around 7 million tonnes. How the market responds to the growing volumes in 2016 and 2017 will be a key factor to watch. We expect the LNG market to become more volatile over the next few years as it responds to 'lumpy' supply and market-side additions plus exogenous supply and demand factors."

Flexible supply attractiveness

Walker concluded: "We see fewer final investment decisions being taken in 2015 than previously expected, which will mean less LNG is available to the market at the end of the decade. This uncertainty brings into sharper focus the attractiveness of flexible supply portfolios which can respond to changing market dynamics."