LNG Exporters Pin Hopes On South Asian Demand Boom To Ease Glut

LNG Exporters Pin Hopes On South Asian Demand Boom To Ease Glut

Team EnergyInfraPost 

South Asia is emerging as a hot LNG market, offering hope of relief  to the exporters reeling under oversupply.  

As per an estimate, the region could import as much as 80-100 million tonne per annum (mtpa) of LNG by 2025, potentially overtaking Europe as the second biggest importer. If Sri Lanka too joins the LNG importers’ club, the figure could go beyond 100 mtpa, say analysts.

Currently, only India and Pakistan in the region are importing LNG. Last year, they together imported 25 million tonne of LNG, or nearly 8 per cent of total global supply.

But  now  Bangladesh has also joined LNG importers’ club. Last month, Bangladesh’s state-owned oil company PetroBangla signed its first LNG import deal (2.5 mtpa, 15 years) with Qatar’s RasGas. 

This deal will help alleviate Bangladesh’s supply shortages only partially. According to Wood Mackenzie, an energy consulting firm, the country needs as much as 8 mtpa of LNG to overcome its domestic gas shortages.

Bangladesh, a country of over 16 crore people, could import as much as 17.5 mtpa of LNG by 2025. The country is seeking to nearly double generation capacity to 24 000 MW by 2021 but is faced with depleting domestic natural gas reserves. Bangladesh does not mine much coal.

Mindful of the domestic gas shortage, PetroBangla is in talks with various parties for both long term and more flexible options for spot LNG deliveries. In June, it signed a pact with AOT Energy to supply up to 1.75 million tonne of LNG.

Bangladesh has drawn up plans for  additional  17 mtpa of planned re-gasification  capacity via floating storage re-gasification units (FSRUs) and an onshore LNG terminal.

 India’s  Reliance Power and Petronet has expressed interest to invest in these projects.

According to Platts, India’s LNG imports should rise by 10 per cent annually over the next few years, surpassing 30 mtoa by 2020 from 19 mtpa in 2016.

This ramp-up in Indian LNG demand will be facilitated by the country’s regas capacity growing by almost 60 per cent to over 45 million tonne in 2021 and a large expansion of domestic gas pipelines, Platts said in a recent report.

Wood Mackenzie expects more upside to Bangladesh’s LNG demand particularly if the 1.5 mtpa Indian piped gas import gets delayed or cancelled, and if its coal-fired power plants do not come online as planned.

Pakistan, which started importing LNG in 2015, has one import terminal and and  the second is about to become operational and the third might be commissioned next year.

The global LNG market remains heavily oversupplied. Exporter are hoping that the boom in South Asian demand will help ease oversupply in LNG markets, which have resulted in a more than 70 per cent price fall from their 2014 peaks to $5.75 per mmBtu. 

Leave a Reply

Your email address will not be published.