Commodity analysts have revised their outlooks for global liquefied natural gas supply down by some 35 million tons as a result of the production and export disruptions stemming from the war in the Middle East.
Forecasters, including Rystad Energy, Kpler, ICIS, and S&P Global, have all updated their expectations for LNG supply recently, Reuters reported, with the revisions covering this year and the period until 2029.
Analysts cited the force majeure on Qatar’s LNG production facilities as the biggest reason, also noting the delay in the country’s expansion project for its North Field and Adnoc’s Ruwais LNG, which is under construction but likely to take longer to complete than originally planned because of the war.
“In the near term, the market rebalances primarily through higher prices and demand destruction in South Asia,” Kpler LNG analyst Laura Page said, as quoted by Reuters. The analytics firm forecast LNG prices will remain elevated, seeing “sustained $20+ levels likely through summer” for Asia. Asian LNG prices have surged by 143% since the start of the war.
Rystad Energy, meanwhile, recently released a report estimating the total cost of repairing oil and gas infrastructure damaged so far at $25 billion, with gas infrastructure in Qatar and Iran suffering the most serious damage and taking the longest to fix.
Predictions of an LNG glut are now out the window, and analysts expect a prolonged period of supply tightness, not least because U.S. LNG cannot ramp up fast enough to cover the shortfall from the Middle East. U.S. LNG export facilities are already operating at capacity, Reuters noted in its report, and a lot of the gas they produce is committed to long-term contracts.
Poorer Asian nations are already switching to coal from LNG as prices climb higher but China has insulated itself: higher pipeline volumes delivered via the Power of Siberia from Russia, as well as higher LNG supply from Novatek’s Arctic LNG 2, will offset lost supply from the Middle East, one Chinese gas trader told Reuters.
By Irina Slav for Oilprice.com
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