Asian LNG Demand Last Year Was Lower Than Expected

Demand for LNG in Asia in 2014 has been much lower than expected, Wood Mackenzie said Thursday.

"Production was up 5 million metric tonnes per annum (mmtpa) to 246 mmtpa and overall trade was boosted by higher levels of re-exports. But the big surprise was that Asian LNG demand was much lower than expected. Demand in emerging markets, like China, failed to grow to the extent anticipated and demand in the established South Korean market fell considerably," Giles Farrer, Wood Mackenzie's Principal Analyst – Global LNG, stated.

South Korea imported 9% less LNG in 2014 than 2013. Wood Mackenzie added that lower Asian demand led to crash in LNG spot prices last year, from a peak of over $20 mmbtu in the early part of the year to under $10 mmbtu at Thanksgiving.

"Prices dropped in the summer as new supply from PNG LNG and reduced Asian demand left the Pacific basin long supply. Then fell further - as Brent oil tumbled from $110/bbl in August to below $60/bbl in December," Farrer said.

PNG exported 3.7 million tonnes in first 7 months of operation, operating at close to 90% of nameplate capacity.

Wood Mackenzie said that a record number of new ship orders were placed in 2014 driven by the prospect of huge volumes of US exports.