The balance of global LNG supply and demand is shifting, and Canada might finally benefit.
Chinese LNG imports have hit all-time records in the past few months, and analysts with GMP FirstEnergy expect that China will reach new monthly records for the next several years.
The demand growth is driven by China’s focus on further emphasizing the use of natural gas in the national energy mix going forward, primarily as part of a drive to shift away from coal and improve air quality in many cities, analysts said in a research note on Friday.
“With import capacity that is expected to increase substantially in the next few years, there could be a doubling of Chinese LNG imports from 2017 levels by 2020.”
With significant demand growth coming at the market, the peaking out of LNG liquefaction capacity adds after 2018 will result in LNG demand starting to bump up against global LNG supply capacity by late 2020 or early 2021, analysts wrote.
“This is likely to spur another wave of announcements to build additional LNG liquefaction capacity this year, with Canada being a potential entrant to this market. We think it very possible that the Shell-led LNG Canada project will undertake a positive final investment decision this year and bring forth 2 bcf/d of additional LNG supply by 2023.
“With a location on the British Columbia coastline, Western Canada’s ample economic supplies of natural gas, and relatively short sailing distances to the major natural gas demand centres of
Asia, the looming prospect of much tighter market conditions presents a unique and potentially once-in-a-decade opportunity to move forward with developing an LNG export project on Canada’s west coast.”