U.S. LNG import wave might not break this year

London, 21 April 2010

U.S. gas traders might experience a touch of deja vu this summer when, for the second year running, an unneeded, bearish barrage of natural gas shipped from overseas fails to land on U.S. shores. Record levels of liquefied natural gas were expected at U.S. terminals this summer as increased global production leaves more LNG for the United States, the market of last resort, to absorb. But as European and Asian markets show surprising demand resilience despite the economic downturn, U.S. natural gas prices slump and supply growth stutters, the U.S. might be spared from additional incoming cargoes. "At the start of the year, the general consensus was that because of new supply trains coming on and lower demand in traditional markets, a lot of LNG would come into the U.S.," said Asish Mohanty, senior research analyst at Wood Mackenzie.
"But, over the past month or two, we have noticed continuing issues with existing production and teething problems at new trains," he said, adding that emerging import markets, like Argentina and Kuwait, will also help suck-up some excess supply.
Increased production in Indonesia, Yemen, Russia and Qatar was expected to flood the market this year with up to 6 billion cubic feet per day (bcfd) of extra supply. However, with outages, delays to new projects and increasing maintenance, the outlook does not look quite so ominous.
Long-term production problems continue in key U.S. supplier Nigeria, while output in Algeria has slowed. A massive new Qatari production train, which earmarked supply for the United States, shut down last month before it even loaded a cargo.

Source: http://www.commodities-now.com/news/power-and-energy/2409-us-lng-import-wave-might-not-break-this-year.html

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