Global LNG supply will outstrip demand by 2019 – BCG report

A new report by the Boston Consulting Group (BCG) has concluded that global liquified natural gas (LNG) supply will exceed demand by 2019, as output continues to rise across the sector.

This prospect of oversupply is set to prevent a rebound in LNG prices and will continue to squeeze industry margins, following the largest supply increase in LNG history.

Before the beginning of 2020, 14 major LNG projects are due to become operational with a combined capacity just shy of 200 billion cubic metres per annum (cma).

“LNG suppliers should be prepared for a bearish market over the next several years,” said the report. “We expect substantial oversupply, driven by the 190 billion cma of additional capacity projected to come online in the next three to five years.

“That oversupply will keep LNG spot prices at low levels and put pressure on industry margins, while increased liquidity in the market will squeeze marketing margins.”

Emerging niche markets in the LNG field, such as Egypt and Pakistan are also posing problems for the industry although they currently tend to involve smaller short term, high risk contracts.