LNG Traded Volume Rises, Reloads Fall

The global LNG market grew at 13.0% last year thanks to an all-time record in capacity additions since 2018: 354.7mn metric tons were sold. Most of the extra gas went to the infrastructure-rich European market, but as prices between Asian and European markets converged, there were few reloads of cargoes: just 1.6mn mt in 2019 compared to 3.8mn mt in 2018. And most of those went to Europe.

Last year was also a record year for new investment decisions, which reached 71mn mt/yr, according to the industry association GIIGNL's annual report published April 8.

The US has become the largest exporter of flexible LNG, accounting for a fifth of the spot and short-term volumes, followed by Australia with a sixth, despite the term contracts underpinning the coalbed methane based projects.

Despite supplying 77.8mn mt to the global market, Qatar’s share of the spot and short-term market was just a twentieth, down from an eighth or so in 2018 and a fifth in 2017. What GIIGNL defines as “true” spot volumes – those delivered within three months of the trade date – reached 27% of total imports in 2019 or 95mn mt, up two percentage points from 2018.

Over the last three years, the industry has added more than 80mn mt/yr of new capacity, mostly from the US, Russia and Australia.

Global LNG flows experienced a shift in patterns compared with 2018: northeast Asian demand growth slowed with the economic decline; milder weather and competition from nuclear and coal-fired power generation also hit demand.

On the demand side, no new country joined the ranks of importers in 2019 but several countries made sound progress on infrastructure development and are set to begin importing in the coming years.

For LNG sellers and buyers, business models and contractual arrangements are becoming increasingly diversified, says GIIGNL president, Jean-Marie Dauger in the introduction: "We see competing interests, a world in which sellers require long-term commitments to support their investments, whereas buyers need shorter contract durations, diversified pricing structures, increased destination flexibility and greater volume flexibility in order to manage demand uncertainty.

"To allow natural gas to penetrate new markets, prices need to remain at levels that make gas competitive with alternative fuels in downstream power and gas markets but, at the same time, support the significant investments needed in production, liquefaction, transportation, transmission and downstream infrastructure.

"A balance will have to be found, and the scale of new developments will depend on the industry’s competitiveness, as well as on its ability to demonstrate its environmental benefits, in particular by increasing efforts to detect, measure and cut methane emissions. Natural gas’s effective contribution in quickly improving air quality and curbing carbon emissions should be key in positioning LNG as an enduring part of the energy mix and as a pragmatic and lower-carbon solution for the future." He said "new gases will begin to take advantage of the versatility of LNG infrastructure."