The glut in LNG supply that caused spot prices to slump to a three-year low in Asia this year will worsen in 2020, triggering the shutdown of 10 million tonnes a year of capacity in the US and putting Australian exporters under pressure, according to a respected energy forecaster.
Fereidun Fesharaki, chairman of FACTS Global Energy, estimates that about 45 million tonnes of supply capacity came online in 2019, with another 35 million tonnes to hit the market next year, outstripping demand.
That new supply would take until the end of 2021 to be absorbed by the market, he said, putting pressure on prices that are not tied to crude oil or other commodities.
Cleared by 2021. Good one. Try never:
This is marginal good news for Australia’s east coast. Spot gas prices are still falling:
But the problem is, the gas cartel prices 90% of the Australian market off Asian contracts prices attached to Brent oil and that price has been rising:
It’s even worse in AUD terms.
There will be no gas or electricity price relief for the income starved east coast economy until gas reservation forces contract price to heal.
It is no more complex than that.