* IEA says “massive amounts of new LNG” coming online
* But ample availability, low prices to spur demand
* Oversupply to gradually make market more flexible
SINGAPORE, Oct 23 (Reuters) - Global liquefied natural gas (LNG) markets will remain oversupplied into the 2020s due to a surge in production, although soaring demand especially from China may tighten the market earlier than expected, the IEA said on Monday.
“We will see massive amounts of new LNG capacity coming to the market ... so we will probably continue to have well-supplied markets into the middle of the 2020s,” said Keisuke Sadamori, director of energy markets and security at the International Energy Agency (IEA).
“The Qataris, for example, are going to increase LNG liquefaction capacity by 30 percent by 2024, which we have not included in our 2017 gas market outlook report,” Sadamori said in Singapore on Monday.
Qatar, which is being challenged by Australia as the world’s biggest LNG exporter, said in July that it planned to increase its LNG output by 30 percent to 100 million tonnes within the next 5 to 7 years.
LNG production in the United States is also soaring, thanks largely to the shale gas boom of recent years.
But Sadamori said soaring demand could rein in rampant oversupply, which has pulled Asian spot LNG prices LNG-AS prices from a peak of $20.50 per million British thermal units in February 2014 to below $10 per mmBtu since 2014.
“Especially in China, we are already seeing something like 40 percent of year-on-year growth in LNG imports. So depending on how demand develops, the timing that the market becomes tighter could be earlier than originally forecasted by the industry,” he said.
China’s LNG imports jumped to their second-highest on record in September as the country ramped up supply for households in northern areas set to use gas for winter heating for the first time in the country’s war on smog.
China imported 3.45 million tonnes of LNG LNG-CNIMP last month, according to data released by the General Administration of Customs on Monday, up 37 percent from the same month a year ago.
Sadamori also said that Asia’s LNG markets would gradually become more flexible under pressure from the oversupply.
Asia consumes some 70 percent of global LNG, yet very little of it is freely traded. Most volumes are delivered under fixed term contracts between suppliers and big buyers in Japan and South Korea.
“We are seeing a gradual decline in the share of the contracts based on fixed destinations ... We are also seeing a trend of contract duration getting shorter overall,” he said.
Reporting by Roslan Khasawneh; Writing by Henning Gloystein; Editing by Tom Hogue
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