courtesy Hoegh LNG

Waterborne Energy projected today that “winds of change” will bring a major shift to the global LNG market in 2009.

The Houston-based consulting firm that tracks and analyzes LNG markets expects global LNG production to significantly increase next year, and international spot prices to drop accordingly.

“While 2009 will start slow, we expect a 30 percent rise in total LNG production worldwide by year end,” says Steve Johnson, president of Waterborne Energy. The firm monitors, analyzes and reports on global shipments of LNG.

As detailed in the December 17, 2008, edition of the U.S. Waterborne LNG Report, the 2.8 tcf of new LNG production capacity should come online in the first half of 2009, if all projects remain on schedule.

“We don’t believe Asia and Europe will be able to absorb this new production, despite 11 new regas terminals under construction. And the economic downturn will limit power demand in Europe, Asia and the U.S.”

Johnson says that by May 2009, excess global LNG will begin to move toward U.S. import facilities simply because it has no place to go.

“Lake Charles and Cove Point will be first to receive LNG cargoes by summer. Monthly U.S. imports will average about 40 bcf by July and could reach 64 bcf by year end.

“The LNG tanker market will face some challenges in 2009,” says Johnson. “Forty-five new tankers are scheduled to be delivered from the yard next year, adding length to an already long market, although some of the new capacity will be dedicated to new projects. We see fewer long-haul voyages and an increase in shorter voyages; spot tanker rates should maintain an average of about $45,000 per day.”

As for 2010, Johnson says intelligence data suggests U.S. import volumes will exceed the 2007 record import year of 2.1 average daily bcf levels.

According to Johnson, U.S. import volumes hit a five-year low in 2008, averaging only about .95 bcf per day, due to delays in global liquefaction projects and production plant outages, combined with sharp increases in Asian and European demand.

LNG shipments to Asia were up in 2008, to 5.7 tcf – from 5.3 tcf in 2007, while European imports also increased this year to 2.1 tcf – from 1.9 tcf in 2007.