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Surging LNG supply likely to outpace global demand this year

Global LNG supply will surge in 2016 after five years of stagnation. New Australian projects are ramping up, including AP LNG, GLNG and Gorgon, despite its current shutdown. Supply may outpace demand this year, with total exports falling 1.2% in the first four months on lower imports from Japan and South Korea. Australia is extending its dominance as the largest exporter to Asia-Pacific. Sabine Pass in the U.S. shipped its first cargo in 1Q. Contract LNG prices may stay low this year if oil fails to rebound.

New LNG supply from Australia, U.S. pushes up exports this year
Global LNG exports rose 2.7% in the first five months of the year to 104 million tons. This is in line with the expected supply surge, as new projects ramp up production. Australia’s AP LNG and Gorgon project, and the U.S.’s Sabine Pass have shipped their first cargos. Train 2 of GLNG started on May 26. Big LNG facilities take five to six years from final investment decisions to production. Supply was little changed in the last five years as disruptions in Yemen, Egypt and Angola offset new capacity.

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