Sadly it falls to me to add clear thinking to another dumb idea at the AFR:
If Asia doesn’t want Australia’s liquefied natural gas, Europe will take it, said the chief executive officer of a shipper of the super-cooled fuel.
Australian producers of LNG are seeing demand in top- consuming East Asian countries, like China, Korea, and Japan, dry up as those economies slow down. That’s causing some Australian developers whose projects are due to come online to look elsewhere, said Gary Smith, who heads up Bermuda-based Golar LNG.
“The only other liquid market that is open to them with the U.S. now closed is Europe,” Smith said Wednesday at the 7th Annual Capital Link Global Commodities Energy & Shipping Forum in New York. “And we’ve seen it before where cargoes start moving west from Australia instead of east.”
Perhaps occasionally we’ve seen it. Very occasionally, when the global arbitrages make it viable. But they are passing episodes. Basically LNG is much cheaper to Europe from both the Middle East and the US. They may ship more to Europe if the demand is there but we won’t. Aside from anything else, if Europe is really that hungry for gas over thr long term then pipelines will deliver it because they are so much cheaper.
Because global price convergence in LNG is advancing increased European demand could help support Asian markets but the bottom line is there is too much gas for everyone, everywhere and looking to Europe to absorb commodity oversupply is the last recourse of the desperate.
