The oil and gas sector in Europe has been a buyer’s market for some time. China’s market is following. All factors converge to price deceleration. It is a buyer’s market, globally.
China’s natural gas consumption was growing in 2014, but below expectations, contributing to what is described as “glut.” The main driver for energy consumption is growth, which is slowing down, and according to the Chinese National Development and Reform Commission (NDRC) the growth of consumption of natural gas is the lowest in 24 years.
The demand for better air quality does favor the use of n IEA natural gas in the energy mix, but earlier this month, the Paris-based International Energy Agency (IEA) sharply lowered its five-year forecast for China’s gas demand. Still, the price of coal is one third that of gas.
Shale and cheaper shipping are making gas a more globalized commodity. China has traditionally paid high prices for LNG, mainly from Qatar, but new supply is coming into the market from Australia and the price in Asian markets has seen a dramatic drop of up to 50%. According to market analysts, new LNG supplies should be available by the end 2015 from the Gulf of Mexico, not to mention shale. Soon, LNG imports in eastern China could be cheaper than imports from Turkmenistan according to the IEA report. Reportedly, the LNG pricefree fallis pressing suppliers on long term contracts to review their terms.
Russian imports expected to come in the Chinese market by 2018 add further downward pressure on natural gas. Turkmenistan is in a plarticularly difficult position since China is a monopsony. However, there is in effect a race to the bottom in Central Asia since “Line D” through Uzbekistan, Tajikistan and Kyrgyzstan is also a mature project.
BP released earlier this month the StatisticalReview of World Energy that world gas production rose by 1.6% last year, but consumption increased by only 0.4%. The surplus supply of gas on the world market doubled last year, just as recession is becoming steeper in Europe and growth is slower in China.
http://www.neurope.eu/article/france-spain-portugal-to-push-midcat-pipeline/