Given the wave of new contract announcements last week at Gastech, I have tried below to make some sense of what this means for the market.
What’s apparent is that in the last two months the LNG industry has returned to develop supply faster than volumes can find a home with final users.
Assessing how “long” global portfolios are in aggregate is far from easy. However, based only on announced contracts, and by making some simplifications, global portfolio length appears to have been returning to increase since August, with the last two weeks especially seeing an acceleration.
The wave of supply currently destined to hit the spot market in the next five years continues to increase, then. This is set to increase competition to secure access to demand sinks and to worsen the expected impact on spot prices in this period. What’s more, the activity of the last few months suggests that this build-up of new supply is not likely to stop soon.
For a deeper dive on the long-term scenarios for the LNG market: https://lnkd.in/g5AFR4D4
Note that this analysis is based only on binding SPAs; also, for the purposes of simplicity, the chart below is only based formal contract announcements, and does not include cases in which project sponsors appear to account for the offtake of the majority of volumes, such as for Louisiana LNG
Source: Giovanni Bettinelli
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