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Global Gas Market

“Oil Voice” reports that global LNG (Liquefied Natural Gas) capacity has increased dramatically. In the year 2000 worldwide liquefaction capacity was 121 million tons per annum (mmtpa) or 844 billion cubic feet per day (bcf/d).  By 2010 it had reached 270 mmtpa (1,882 bcf/d).  By the end of this year it will be about 400 mmtpa (2,800 bcf/d).  These are big numbers expressed in seldom quoted units, so it might be difficult to put them in perspective.  However, an increase of almost 50% over the last 7 years is easier to grasp.  Much of this increase is the result of “mega-projects” in the Middle East and Australasia.  Weak prices, and even more capacity scheduled to come on stream, can indicate a market correction is in store.

Global LNG capacity has grown in response to abundant supplies looking for a market and booming demand, partly attributable to switching from coal and nuclear. The shale revolution in the U. S. has resulted in abundant supplies here as well, and predictably, the U. S. has started exporting LNG.  We are already shipping cargoes to Europe, Latin America, Asia and even the Middle East/North Africa.

While we are newcomers to the global LNG market, we enjoy a number of advantages which make us a competitor to be reckoned with. These include:

-Abundant reserves

-Low upstream production costs

-Liquid and Transparent gas trading market via Henry Hub

-Existing infrastructure for energy projects.

Concurrently, our foreign competitors are suffering from budget cuts, project delays, technical problems and gas supply shortages. Examples include projects in Trinidad, Egypt, Western Australia and Nigeria.

While oil prices have increased by 43% since the end of the first quarter of 2016 (from 35/barrel to $50), this has been the result of market manipulation by OPEC and its allies. Over the same period of time domestic natural gas prices have increased 56% (from $1.88 per million British Thermal Units to $2.94) as a result of free market forces.

Henceforward, the global LNG market might well tighten with additional capacity coming on stream both here and overseas. However, it appears that the U. S. is well positioned to compete.

To read the article its entirety, which has a very interesting graph of global LNG capacity by region, please go to https://oilvoice.com/Opinion/3525/DW-Monday-The-Great-Global-Gas-Surplus .

Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide.  Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.