Global LNG sales could see 10 Mln tons/year rise

European and American demand for LNG could result in additional sales of up to 10 million mt over 2008's global total sales of 167.78 million mt, said Tony Regan, principal consultant at Singapore-based energy consultancy Tri-Zen Wednesday. Regan said increased buying interest came as a result of commissioning cargoes for new terminals in the UK and Canada, as well from the spot LNG market on lower prices.
"The lower gas prices means that there is more incentive for power generators and city gas companies to use gas instead of crude," he said.
The UK was importing LNG to replace North Sea gas which was "running out" while mainland Europe was looking to diversify its supply sources from its usual provider countries of Russia, Norway and Algeria, he added.
Of the total additional sales in 2009, 7 million mt would be destined for Europe, while the US, Mexico and Canada would absorb up to 3 million mt, making up for slack demand from Asia, he said.
"Demand from the northeast Asian countries of Japan, Korea and Taiwan is down by 10%. The region is expected to stay flat for the rest of 2009," he said.
"Japan and Korea have high stocks of LNG but the weather could be a significant factor in the fourth quarter."
An earthquake earlier this month in Japan boosted spot demand as nuclear plants in the country were shut down.
More buyers are currently in the market for material, with 21 purchasing countries this year compared with 14 importing nations back in 2005, according to a report issued by Tri-Zen.
Emerging buyers such as China and India would import "a bit more" LNG this year while south American nations Argentina and Brazil were still "small buyers," he continued.
In light of new LNG supply capacity coming online this year, Regan warned that "prices will be knocked down further" if material was sold to the US.
"A lot of US domestic production has been shut in, enabling LNG to go in. If Europe starts backing out, cargoes will head to the US, which has always been the market of last resort," said Regan.