Singapore: Liquefied natural gas (LNG) production may increase at the slowest pace in 28 years because of equipment breakdowns, reduced gas supplies and delays in new projects, a London-based consultant said.
This year’s output growth may be less than 2%, said Andy Flower, an industry consultant and a former executive at BP Plc.’s LNG business. Global LNG imports reached 172.6 million tonnes (mt) in 2007, he said. All natural gas that’s chilled to liquid form is meant for overseas shipment.
“This is the lowest since 1980-81 when LNG output fell after the collapse of Algeria-US LNG trade,” Flower said in an interview in Singapore on Wednesday. Production rose 0.4% in the first nine months of 2008 compared with a year earlier, he said.
Growth in LNG trade has slowed after expanding 7.3% last year because of technical problems in Algeria and Norway, limited gas supplies to feed liquefaction plants in Nigeria and Egypt, and the delayed commissioning of new ventures in Qatar, Russia and Yemen. The global recession may also cut LNG demand as it curtails electricity use in Asia.
“The crisis may weaken demand and slow project approvals,” Flower said. Output of LNG may climb about 25mt in 2009 and 2010, respectively, as new projects start operations in countries including Qatar, Yemen, Indonesia and Australia, Flower said.
The annual increase may suffice to meet yearly demand from South Korea, the world’s No. 2 importer of the fuel, he said.
Asia increased imports of the fuel from the Atlantic Ocean area by 7mt in the first nine months of 2008 to about 11.2mt, Flower said.
Shipments to Asia from the Atlantic Basin including Nigeria, Algeria, Equatorial Guinea and Egypt may fall in the fourth quarter to about 2.5mt after a cooler summer damped demand and inventories increased in South Korea and Japan, the world’s top LNG importer, he said. World LNG consumption this year may rise 5.8% to about 183mt, Flower said in August.