Wood Mackenzie sees room for LNG oversupply in Asia to 2025

Wood Mackenzie said that despite the outlook for global demand looking increasingly subdued, the number of LNG projects proposed to take a Final Investment Decision (FID) in 2015 and 2016 has not reduced significantly, in contrast to the 45 upstream oil & gas projects which have been postponed FID so far in 2015. 

‘If there are no postponements, Wood Mackenzie says the market could see an additional 100 million tonnes per annum of LNG sanctioned in the next 6-18 months, extending the likelihood of an oversupply of LNG in Asia to 2025’ the consultancy wrote in a note published on Thursday. 

According to Wood Mackenzie, the FID decisions are following a surprising trend. 

“With the LNG market facing a wall of new supply just as China's gas demand growth has faltered, it is surprising how few new projects chasing a final investment decision (FID) have been postponed” Noel Tomnay, Vice President Global Gas & LNG Research for Wood Mackenzie, commented in the press release.

Wood Mackenzie said that global LNG supply is presently around 250 million tonnes per annum (mmtpa) and there is a further 140mmtpa under construction. 

“Recognising that the global market will struggle to absorb such a large supply uptick, for some time now we've been forecasting a soft global market. However that bearish prognosis is now being exacerbated by a demand downturn” Tomnay said.  

Wood Mackenzie warns that if company statements are to be believed we will see FID on some 50 mmtpa of LNG from the US and a further 50 mmtpa from outside the US within the next 6-18 months.  

"Development of even half of this proposed supply could prolong the Asian oversupply to 2025” Tomnay explained.