LNG reached an equilibrium as supplies keeps coming
With the low price of LNG offering little incentive to producers to commit to more investment, the focus upstream has been more than ever on cutting costs, but project deferrals are hardly being discussed
In an oversupplied market, European and Asian liquefied natural gas markets have reached an equilibrium at a low price that offers little incentive to producers to commit to more investment. Surplus spot cargoes – the consequence of long-term buyers no longer needing the commodity and so selling them on – are in ample supply, which also discourages buyers from entering into term contracts at a premium to the spot price. So the LNG goes to whichever of the two markets offers the seller the best netback at time of sale. And with more LNG coming to the market in the coming months from Australia and the US and little sign of economic recovery in the near term, there is little reason to see this
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