Global LNG market
The global LNG (liquefied natural gas) market has continued to face a supply glut due to growing LNG supplies and weak demand from established LNG-importing countries such as Japan, South Korea, and Brazil. However, the growth of LNG imports from emerging and new markets has more than offset the decline. Cheniere Energy (LNG) is expected to benefit from this new trend.
According to Cheniere Energy’s 3Q16 earnings call, “Through the third quarter, Global LNG volumes are up 7% year-over-year with continued strong demand from India, China and new consumption from the Middle East and Pakistan.” The company expects the strong LNG demand from China (EEM) and India to continue. Moreover, new markets are exploring LNG import options. In the earnings call, the company added that “during this past quarter, five new markets were enabled by floating infrastructure: Ghana, Jamaica, Colombia, Malta and Abu Dhabi.”
LNG imports from new markets are driven by the higher use of FRSUs (floating storage regasification units). The share of FRSUs as a percentage of total regasification has continued to grow over the last year because FRSUs require less capital than onshore regasification units.