The Global Natural Gas Market is growing - Dec 17
Posted: Sat Dec 17, 2022 9:47 am
As I mention in just about every one of my podcasts, natural gas prices are "regional"; set by the supply/demand fundamentals in each region/country. Prior to 2022 the U.S. natural gas market was oversupplied for almost 14 years, thanks to the massive supply increase from the Marcellus/Utica shale plays in Appalachia.
There has been a "Structural Change" in the U.S. market with the rapid increase in our LNG export capacity and the much higher priced global gas market. Asia and Europe are both significantly "short gas" and they will remain in a bidding war for LNG cargos.
I believe U.S. natural gas prices will move toward 1/6th the price of oil, but it will take a few more years to get there. My "guess" is that those higher gas prices will be the New Paradigm when U.S. LNG export capacity reaches 20 Bcf per day. Once the Freeport LNG facility is back online, our LNG export capacity will be 14 Bcf per day. We should reach 20 Bcfpd of LNG export capacity by early 2027.
Canada and Mexico will also be exporting LNG within a few years, adding to total natural gas demand in this region.
--------------------------------------------------
The Global Gas Crunch is Set to Worsen as China Reopens
BY TYLER DURDEN
FRIDAY, DEC 16, 2022 - 07:20 PM
China’s natural gas imports are set for a 7-percent rise next year as the country reopens after Covid lockdowns, which could aggravate an already tight supply situation globally.
The 7-percent import increase forecast was made by state-owned energy major CNOOC, which said, as quoted by Bloomberg, that it was already looking for LNG cargoes for next year.
The report notes that gas inventories at ports in the northern part of the country are depleting at a faster rate than usual because the weather is colder, pushing consumption higher, and this will, too, have an effect on future demand for imports.
What’s more, pipeline supply of natural gas from Central Asia is in decline, which means China will need to rely more on LNG in its gas import mix to make up the difference. And this means more intense competition for a limited number of cargoes between Asia and Europe next year as well.
This year, Chinese gas demand has been trending lower for most of the year, with imports declining consistently over the first ten months of the year, per a report by Energy Intelligence. LNG imports were down by a sizeable 21.6 percent over the ten-month period, reflecting the effects of lockdowns and other restrictions under the country’s zero-Covid policy.
Yet now this policy is being reversed, mass mandatory testing is being dropped and analysts expect a rebound in economic activity before too long. This will drive higher demand for energy and contribute to higher prices due to the tight supply situation in both oil and gas.
This reversal of Beijing’s Covid policy surprised many, who expected tepid demand for energy to continue in one of the world’s largest consumers. If activity rebounds fast, securing sufficient gas supply for the next heating season will likely become a major problem for most importers.
There has been a "Structural Change" in the U.S. market with the rapid increase in our LNG export capacity and the much higher priced global gas market. Asia and Europe are both significantly "short gas" and they will remain in a bidding war for LNG cargos.
I believe U.S. natural gas prices will move toward 1/6th the price of oil, but it will take a few more years to get there. My "guess" is that those higher gas prices will be the New Paradigm when U.S. LNG export capacity reaches 20 Bcf per day. Once the Freeport LNG facility is back online, our LNG export capacity will be 14 Bcf per day. We should reach 20 Bcfpd of LNG export capacity by early 2027.
Canada and Mexico will also be exporting LNG within a few years, adding to total natural gas demand in this region.
--------------------------------------------------
The Global Gas Crunch is Set to Worsen as China Reopens
BY TYLER DURDEN
FRIDAY, DEC 16, 2022 - 07:20 PM
China’s natural gas imports are set for a 7-percent rise next year as the country reopens after Covid lockdowns, which could aggravate an already tight supply situation globally.
The 7-percent import increase forecast was made by state-owned energy major CNOOC, which said, as quoted by Bloomberg, that it was already looking for LNG cargoes for next year.
The report notes that gas inventories at ports in the northern part of the country are depleting at a faster rate than usual because the weather is colder, pushing consumption higher, and this will, too, have an effect on future demand for imports.
What’s more, pipeline supply of natural gas from Central Asia is in decline, which means China will need to rely more on LNG in its gas import mix to make up the difference. And this means more intense competition for a limited number of cargoes between Asia and Europe next year as well.
This year, Chinese gas demand has been trending lower for most of the year, with imports declining consistently over the first ten months of the year, per a report by Energy Intelligence. LNG imports were down by a sizeable 21.6 percent over the ten-month period, reflecting the effects of lockdowns and other restrictions under the country’s zero-Covid policy.
Yet now this policy is being reversed, mass mandatory testing is being dropped and analysts expect a rebound in economic activity before too long. This will drive higher demand for energy and contribute to higher prices due to the tight supply situation in both oil and gas.
This reversal of Beijing’s Covid policy surprised many, who expected tepid demand for energy to continue in one of the world’s largest consumers. If activity rebounds fast, securing sufficient gas supply for the next heating season will likely become a major problem for most importers.