Japan, the world’s largest gas importer, says global long-term LNG contracts are sold out before 2026 amid fierce competition for the fuel as Europe tries to replace supplies from Russia’s gas pipeline.
Estimates of sold-out LNG deals emerge from a survey of Japanese companies conducted by the local Department of Commerce and quoted by Bloomberg.
The high price of spot LNG has cost many Asian buyers this year as Europe aggressively gathers gas, prompting suppliers to prioritize spot LNG sales to this block to enjoy high prices. At the same time, market volatility, uncertainty and concerns about energy security have led more and more buyers to look for long-term contracts.
Kateryna Filippenko, an analyst at Wood Mackenzie, said the race for LNG supplies could lead to a wave of new LNG project developments. However, a large part of this new LNG supply, including from projects that have made their final investment decisions (FIDs) in previous years, will probably not come until after 2026.
Filippenko noted that until about 2026, Europe will have to compete with Asia to buy LNG to meet demand. The competition will be even fiercer than now.
“Competition between Europe and Asia with limited LNG supplies will be fierce until a new wave of supply emerges after 2026. Until then, prices will certainly rise.”
For its part, Japan will regain its position as the world’s largest LNG importer this year as China’s LNG demand and imports collapse like never before.
Last year, China beat Japan to become the world’s largest LNG importer for the first time. This year “the winds continue to turn” amid lackluster Chinese demand as Covid-19 lockdowns have slowed industrial demand and economic growth.
Source Oil Price, Bloomberg