Next Two Years Key for Future Developments of LNG, Says BG Group

The Liquefied Natural Gas (LNG) market will be more volatile over the next years, while the reaction of market players to the incremental supply in 2015 will be a key element for the future of LNG, according to BG Group’s Andrew Walker.

“After four years of flat supply we are entering a period of supply growth. 2014 marked the start-up of a new wave of supply from Australia” Walker, BG Group Vice President of Global LNG, commented on Wednesday. 

Walker said that the increase in supply will be absorbed by growth in Asian demand and the creation of “up to six markets,” which include Poland, Egypt, and Jordan.

“How the market responds to the growing volumes in 2016 and 2017 will be a key factor to watch. We expect the LNG market to become more volatile over the next few years as it responds to 'lumpy' supply and market-side additions plus exogenous supply and demand factors” he said in a note released on Wednesday.  

Despite the certain growth, investments in LNG have been lower than previously expected. 

“(This) will mean less LNG is available to the market at the end of the decade” Walker concluded.  

The growth of the LNG market will also have to do Washington’s decision to eventually give its green light to exports. American companies are currently discussing ban on energy exports, with some asking to lift the ban on crude oil exports.  

According to ConocoPhillips Chairman and CEO Ryan Lance’s intervention at the US Chamber of Commerce, lifting the ban would help sustaining the production and avoid seasonal surpluses.

‘The resulting price discounts on domestic light oil sold to refiners, combined with weak world oil prices, threatens to force proposed development projects below their break-even points. Unless exports are allowed, the pace of drilling would slow, causing domestic job losses and damaging the economy’ Chevron wrote on Tuesday.