HOUSTON — Global trade in liquefied natural gas hit a record high last year, an industry group reported this week, as the market for the fuel heads toward an oversupply this year.
Last year’s surge in LNG trading came as new liquefaction plants in Australia and Indonesia began shipping to customers in Europe and the Middle East. But with a large amount of capacity coming online along the U.S. coastline, where this year’s new cargoes will end up is less certain.
Shipments of the fuel, called LNG, grew by 2.5 percent to 245.2 million tons annually or roughly 32.2 billion cubic feet per day in 2015, the International Group of Liquefied Natural Gas Importers or GIIGNL reported. The global trade now totals a little less than half the 79 billion cubic feet of natural gas the U.S. produces daily.
“In a global context of lower energy prices and sluggish economic growth, the LNG industry is holding its breath for the impact of an export wave from the United States,” GIIGNL president Domenico Dispenza wrote.
In 2015, new projects added 14.4 million tons per year of new liquefaction capacity across the globe. The largest leap was made in Australia, where the Santos GLNG project’s first shipments made the country the globe’s second largest exporter ahead of Malaysia. Qatar is the world’s largest exporter of LNG.
In 2016, the LNG floodgates are expected to open. GIIGNL expects 42 million tons per year of new capacity to come online, as both new projects are christened and existing ones begin to ramp up liquefaction. Already, massive projects such as Northeast Australia’s Gorgon LNG have shipped their first cargoes.
Simultaneously, demand for the fuel looks shaky. Countries such as South Korea and Japan saw demand for gas stay nearly flat or decline in 2015. Both China and European markets grew, despite weak economic growth, GIIGNL said.
“Increasingly, emerging markets are driving demand growth,” the group said. For example, in 2015, Egypt, Jordan and Pakistan, helped absorb some of the oversupply by ramping up imports to a combined 5.5 million tons, mostly through spot and short-term agreements.