The vice president of LNG marketing for North East Asia for French energy-giant Total has told delegates attending the Gastech 2009 conference that while the current stagnation in global demand for natural gas could continue until 2011 the long term prospects for the energy source remain solid.
Yves Cerf-Mayer told the conference that while supply availability will increase by 8% over the next two years, global LNG demand is currently falling by 7%-9% as the recession takes effect.
“The current disconnect between costs and commodity prices is an added hurdle for new projects. Shortage of project sanctions today means limited supply growth tomorrow,” Cerf-Mayer said.
“As at mid 2008, almost all LNG market experts had great expectations that the growth of spot/short term LNG trade, particularly in Asia, would continue to rise steadily from 2009 towards the forthcoming decade. This is no longer possible,” he added.
Cerf-Mayer also warned that while the “buyer’s market” would most likely remain until 2011, better cooperation must be fostered between suppliers and buyers to ensure that the LNG supply chain is protected.
“Flexibility, whether contractual, operational or commercial, will be an essential asset for those resilient players who have set in their business models flexibility features such as diversion clauses and Master Trading Agreements to
mitigate, defend and optimise their positions,” Cerf-Mayer said.
However, it was not all bad news as Cerf-Mayer also produced estimated figures that forecast a sharp rise in Asian LNG demand over the six years. The 2009 amount of around 105 million tonnes per annum (mtpa) is set to increase to between 127-132 mtpa in 2012 and to 148-153 mtpa in 2015.
