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By Shadia Nasralla
FLORENCE, Italy, Feb 4 (Reuters) - Oversupply in the global market for liquefied natural gas (LNG) could extend until the middle of the year but then ease as demand from southeast Asia and India picks up, an executive from Japanese oil and gas firm Inpex Corp. told Reuters.
LNG prices are at record lows due to lower demand from Asia stemming from a warmer-than-usual winter and a weakened economy from a trade war with the United States.
“There is at this moment a kind of oversupply. The oversupply situation is ongoing ... maybe some time until the middle of this year,” Hitoshi Okawa, Inpex’s Australia chief, said on the sidelines of the Baker Hughes annual meeting in Florence.
“But economic growth in Asia Pacific particularly - China and India and southeast Asian countries - their economic growth is still going, so that means they will generate new energy requirements,” he added.
There are also concerns about the impact of the coronavirus on China’s industrial demand, which accounts for 60% to 70% of total LNG consumption in China.
Okawa said there was likely to be a negative impact from the coronavirus but said it was difficult to quantify that impact.
Inpex operates Australia’s Ichthys LNG plant. Production at the plant, Japan’s biggest foreign investment, has climbed rapidly towards its full capacity of 8.9 million tonnes a year, quicker than normal for LNG projects, especially for a company building its first one, consultants Wood Mackenzie have said.
Until 2040, the company wants to expand gas exploration and production, as well as midstream activities, in southeast Asia. The firm also wants 10% of its revenue to be from renewable energy, Okawa said. (Reporting by Shadia Nasralla; Writing by Nina Chestney; Editing by Edmund Blair)