For many LNG suppliers, liquefaction capacity holders and LNG traders, 2017 is ending on a high: the winter market of 2017/18 looks unexpectedly tight, with Asian LNG prices close to USD 10/MMBtu and oil prices on the rise. The global LNG market readily absorbed around 30 mt of additional supply in 2017, leading some in the industry to question the notion of oversupply that lasts into the early 2020s. Will the current confident market sentiment be sustainable as we move through 2018?
A few planned liquefaction projects have concluded long-term LNG supply/capacity agreements recently, demonstrating that deals can still be done, even in the current market environment, and some LNG project FIDs may not be far away. However, the rate of LNG supply growth will increase further in 2018, with nearly 40 mt of additional LNG supply entering the market. Will China, with its mind set on cleaning up its skies by switching from coal to gas, come once again to the market’s rescue, or will 2018 be the year when the long-anticipated LNG glut finally hits?