A recently released analysis of the future financial prospects for liquified natural gas (LNG) strongly suggests that markets are imploding. The LNG issue becomes relevant for those concerned about efforts to build new, unneeded natural gas pipelines because of excessive natural gas supplies and reduced domestic demand. The report by the Institute for Energy Economics and Financial Analysis (IEEFA) notes:
High prices in prior years had spurred a torrent of new LNG projects around the globe. But that optimism sowed the seeds of the fuel’s current troubles, as massive new supplies of LNG, much of it coming from the U.S., flooded global markets even as demand growth remained muted. The resulting oversupply fueled a global price slump: even before COVID-19 decimated global energy demand, LNG prices were already plummeting to a ten-year low.
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The LNG industry entered today’s crisis on shaky footing. And now that the economic slowdown is in full swing, all previous LNG supply and demand projections have been rendered moot, and all crystal balls remain cloudy. In that context, delay is a smart decision.
For the complete IEEFA report, click here.