According to Cedigaz’ First Estimates, LNG imports grew by 2.1% in 2015 to 241.2 Mt. Main highlights include the reversal of growth trends in Asia and in Europe, the emerging role of the MENA countries as LNG importers and the growth of intraregional and intra-basin trade due to the convergence of global prices.
Change in growth trends in Asia and Europe
After many years of growing demand in Asia and declining demand in Europe, trends changed on the two largest LNG markets in 2015. For the first time since 2009, Asian LNG net imports declined by 2.8% to 172.8 Mt (-5Mt) mainly because of weather related factors, gas-fuel competiveness and the slowdown of economic growth. The bulk of the decline came from Japan and South Korea, the two biggest importers in the world: in these two countries, LNG net imports declined respectively to 85 Mt and 33.4 Mt which represents a combined decline of 7.2 Mt (-5.8 %). In a context of slowing economic growth and poor gas price competitiveness, Chinese demand dwindled by 0.9% to 19.7 Mt while LNG imports grew at an average annual rate of 20.1% from 2010 to 2014. Rising imports in Thailand (+ 1.3 Mt to 2.6 Mt) and Taiwan (+1.1 Mt to 14.6 Mt), as well as the beginning of imports in Pakistan (above 1 Mt) did not suffice to offset the regional decline.
European LNG net imports grew by 10.2 % in 2015 to 37 Mt after three years of continuous decline, but remained far below the peak level of above 65 Mt reached in 2010 and 2011. Except in France, where net imports declined to 4.3 Mt and in Greece where imports were flat at around 0.4 Mt, LNG net imports increased everywhere because of various factors. In the Iberian peninsula, LNG demand was boosted by the power sector as a summer heatwave increased air conditioning demand while droughts reduced the availability of hydropower. In Northwest Europe, where gas markets are more liquid than in other parts of the region, LNG net imports grew significantly as large portfolio owners, including Qatar, diverted LNG to limit oversupply in Asia. In the United Kingdom, where the South Hook terminal received about 20% more LNG (all coming from Qatar), net imports grew to 9.4 Mt and in Belgium and in the Netherlands net imports grew respectively to 2 Mt and 0.7 Mt.
Rise of the MENA region as a new growth driver
In 2015, the weight of the Middle East North Africa countries in the global LNG market strengthened and the region emerged as the new growth driver. Last year, the five importing MENA countries received close to 10 Mt of LNG against only 4.1 Mt in 2014 (+141% or 5.8 Mt). Growth was fuelled by new importers, i.e. Egypt and Jordan, which procured respectively 2.7 Mt and 1.7 Mt using FSRUs moored in the Red Sea. Qatar (2.1 Mt) and Nigeria (0.6 Mt) provided the bulk of this new demand. Traditional buyers – Dubai and Kuwait – also contributed strongly to the growth, with imports up 61% and 20% respectively to 2.5 Mt and 3 Mt. Imports remained stable in Israel with only one cargo received, as in 2014.
Americas: decline in the North, growth in the South
In North America, LNG imports dropped by 5.1% to 9.2 Mt. The decline came mainly from Mexico were a 44.7% surge in pipeline imports from the United States to 31.6 bcm caused a 20.8% (-1.3 Mt) collapse in LNG imports. In the United States, LNG net imports increased to 1.7 Mt (+48.5%) in 2015 as deliveries grew significantly in Massachusetts and Georgia.
In Latin America, LNG net imports increased by 12.4% to 12.1 Mt due to a rise in Brazilian imports in early 2015 to offset the drop in hydropower output: in this country, net imports grew by 42.2% to 5.7 Mt. In Argentina, the growth of domestic production by 2.9 % to 36.5 bcm limited demand for LNG and imports decreased by 10.3% to 3.7 Mt.
Growth of intraregional and intra-basin trade flows
As demand declined in the Far East in a context of growing supply, spot prices collapsed and converged globally (with the exception of North American prices which remained markedly lower than elsewhere in the world). As a consequence, suppliers of flexible LNG tried to limit shipping costs by targeting the nearest markets. Thus, a trend towards intra-basin trade flows of LNG emerged in 2015: imports from Nigeria decreased by 15% in Asia Oceania (-1.5 Mt) while in Europe and Latin America, they increased by 1.2 Mt and 0.6 Mt respectively. In addition, exports of Qatar to Asian countries decreased by 4.1 Mt (-7.5%) while exports to Europe jumped by 17.3% (+3 Mt) and exports to the MENA countries more than doubled to 4.5 Mt. Similarly, LNG exports of Trinidad and Tobago to Europe and Asia Oceania dropped by 47.2% (-1.1 Mt) and 60.3% (-0.6 Mt) respectively, while exports to the neighboring North American countries grew by 23.8% (+0.8 Mt).
Note: Cedigaz first estimates are based on official statistics and proprietary data. LNG trade data do not include domestic transshipments in Indonesia. Other papers on LNG markets are available on Cedigaz blog.
Detailed statistics with imports by country of origin will be made available soon to subscribers of Cedigaz LNG Service.