Europe's LNG supplies to drop 70 pct by 2015 –Barclays

Supplies of liquefied natural gas (LNG) to Europe are likely to drop by almost 70 percent by 2015 as the booming Asian market sucks up cargoes, Barclays said on Thursday.
As a result, Europe will continue to rely largely on pipeline gas from sources such as Russia and Norway to meet its natural gas needs, Barclays Capital said in a research note.
After 2015, rising Australian and U.S. LNG exports should push supplies back to current levels, it added.
"We estimate that the LNG available for Europe will fall from 2012 levels of 46 mtpa (million tonnes per annum) to around 15 mtpa by 2015, before starting to increase back to current levels as the large Australian trains ramp up production and U.S. exports of LNG begin."
Barclays said this trend had already begun as European imports of global LNG supplies have fallen 33 percent year-on-year in the first half of 2012, while Asian imports have risen by 16 percent.
"Asian demand, heightened by additional demand from Japan and new regasification facilities in China, India and others, has pulled gas away from Europe, which is seeing lower demand and greater competition to LNG from pipeline supply," the bank said.
Despite this trend, Europe still may not find itself undersupplied with gas, because the price competitiveness of gas relative to coal and renewable sources has been declining in the region.
"In Europe, the potential of gas has somewhat stalled as relative pricing no longer favours the fuel in power generation and the number of new-build, gas-fired power projects begins to stall as the uptake of renewable power generation tips the region's power markets into capacity oversupply," BarCap said.
Despite the longer-term LNG trend in favour of flows to Asia, spot deliveries to Europe have picked up in recent weeks.
A nosedive in natural gas spot prices in Asia over the past two months as well as new supplies from Australia, Nigeria, Norway and Indonesia have resulted in large numbers of redirected shipments from Asia to Europe.
Although most analysts say that long-term trends favour Asia as a region to sell LNG into, some say the current trend of redirected shipments to Europe could remain in place until the end of the year.
Source: Reuters