The global LNG market is expected to see a peak in supply tightness in 2014, rising Asian demand will likely match the average 0.9 Bcf/day additional liquefaction capacity expected to come onto the market in the year, Barclays Research said in a report late Tuesday.
Four liquefaction projects with a combined capacity of 2.5 Bcf/day are set to come online in 2014, but Barclays Research analysts noted that the majority of that is only expected to start up in the second half of the year and that consequently "production growth should be far smaller than capacity would suggest."
Export projects slated to commence operations next year are Australia's 8.5 million mt/year Curtis Island LNG project, Indonesia's 2 million mt/year Donggi Senoro, Algeria's 4.7 million mt/year Gassi Touil at Arzew and the first phase of ExxonMobil's Papua New Guinea LNG plant, with an initial capacity of 3.45 million mt/year.
In terms of regasification capacity, the growth rate for 2014 is estimated at 2.8 Bcf/d, with all except one of the new terminals located in Asia.
Notably, China's LNG imports should rise substantially as five new plants start up by the end of next year, while LNG demand into Malaysia, Singapore and Indonesia should grow as well, Barclays Research said.
Chinese LNG imports have already been increasing this year, with Dalian and Zhejiang terminals ramping up intakes following last year's expansions, the analysts added.
For Japan and South Korea -- the world's two largest LNG consumers -- demand prospects largely depend on the restart of nuclear power reactors, with South Korea facing more downside risk in LNG demand compared to Japan in the coming year.
In Japan, 12 nuclear power reactors, with a combined installed capacity of 11.2 GW and making up 24% of Japan's total nuclear generation capacity, applied in July for permits to restart. Safety reviews are expected to take at least six months, hence putting the earliest restart in early 2014.
Barclays Research noted that although "an increase in nuclear generation will reduce fuel burns at thermal generation facilities... the effect is likely to be unevenly distributed, with crude and fuel oil consumption likely to fall before reducing LNG burns."
As such, with "Japanese demand unlikely to grow in 2014 and possibly dropping in 2015, and supply set to improve," analysts from Barclays said tightness in the global LNG market might peak next year.
