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Oil slump puts heat on LNG


Source: The Australian, 2 April 2015

Sliding oil prices are expected to cut Asian demand for gas-fired power, putting further pressure on LNG prices just as Australia starts ramping up its gas exports through new LNG plants.

Consultants WoodMackenzie are tipping already depressed LNG prices, down about 50 per cent in the past two years to about $US8 per million British thermal units, would fall further.

'The trend of lower spot prices is set to continue and will be exacerbated by oversupply in the market," said Chong Zhi Xin, WoodMackenzie's chief Asia gas and power analyst.

'There are over 100 million tonnes of new LNG supply that will come on in Australia and the US in the next five or six years." Most of the new Australian LNG will be sold on contracts with prices that are linked to oil, meaning the low oil price environment will directly affect revenue.

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