September 2, 2020 Read More →

LNG industry outlook ‘is actually not that bad … demand can catch up’

Petrochemical Update:

U.S. LNG exports fell to 3.2 Bcf/d in the third quarter from 7.9 Bcf/d in the first quarter. They may rise to 5.5 Bcf/d in the fourth quarter and 7.1 Bcf/d in first quarter 2021, the Energy Information Administration (EIA) projected in mid-August, Petrochemical Update reported.

“The current market is really challenged but the outlook is actually not that bad. Beyond this year, until 2023 there is very little new production capacity scheduled to come on line meaning that demand can catch up,” Benjamin Nolan, managing director at Stifel Financial Corp., told Reuters Events.

“Consequently, there is a very steep contango in the forward curve,” he said by e-mail on Aug. 12.

LNG became “the worst-performing global energy commodity” during the pandemic, the Institute for Energy Economics and Financial Analysis (IEEFA) said on July 29.

The U.S. LNG industry “is suffering through a worse-than-worst case scenario” because of a market collapse on a scale inconceivable four years ago. LNG performed worse than coal or oil during the pandemic, it said.

“Maybe from a price perspective that could be true. From a consumption perspective, I don’t believe it is,” Nolan said.

“I’ve seen consumption estimates for the year anywhere from -3% to 2%, which is far greater than consumption for either of the other two,” he added. 

[Renzo Pipoli]

More: PU: U.S. LNG exporters face adverse market in 2020 but outlook to improve

Posted in: IEEFA In the News

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