Oversupply has ‘fundamentally changed’ the LNG market — but it won’t last long

Reuters

A man looks as the world’s biggest Liquefied Natural Gas (LNG) tanker DUHAIL as she crosses through the Suez Canal. The Qatari tanker, which was built to transfer LNG from Qatar to Europe and the U.S., is on her first trip ever from Qatar to Spain.

A global liquefied natural gas (LNG) supply glut may soon be offset by a rapid uptick in demand, Oil Search CEO Peter Botten said Wednesday.

“The market has fundamentally changed in the past few years,” Botten said at the Abu Dhabi Petroleum Exhibition Conference (ADIPEC).

“It has clearly been driven by oversupply but this won’t necessarily last that long amid a burgeoning demand for LNG.”

American shale drillers upended the energy industry after years of booming production — and the U.S. wants to sell even more of its excess gas abroad.

On Tuesday, the International Energy Agency (IEA) said the U.S. was on course to become the leading global gas exporter by the mid-2020s. In the energy watchdog’s flagship publication, the IEA said U.S. LNG was also accelerating a major structural shift towards more flexible international gas markets.

The U.S. shale revolution paved the way for a three-year oil price downturn that sent crude spiraling from more than $100 a barrel in 2014 to about $60 today. That has piled pressure on the oil-dependent economies of OPEC nations and forced a round of production cuts this year.

Meanwhile, China — the world’s third-largest gas buyer — is importing more LNG as the government looks to become less dependent on dirty coal as part of its drive to clear the skies.