According to GlobalData, LNG imports by the world’s top three consumers – Japan, China and South Korea, and other Asia-Pacific (APAC) countries such as India have taken a hit due to reduced demand and economic slowdown fuelled by the Covid-19 outbreak.
Against this backdrop, LNG firms are re-examining their strategies to combat the financial slowdown. This has led to long-term LNG supply contract renegotiations and cargo deferments by the importing counties, causing supply overhang and resulting in lower LNG prices, the data and analytics company says.
Haseeb Ahmed, Oil and Gas analyst at Global Data, commented, “Low gas prices and LNG supply glut have impacted LNG producers, who are rethinking their capex spends in the upcoming multi-billion-dollar gas projects.”
“Woodside Energy decided to cut down its capex spending for the year 2020, which led to the delay in the Flame Ionization Detector (FID) of Pluto LNG Train 2 project in Australia.
“The expansion of PNG LNG plant in Papua New, operated by Exxon Mobil PNG, is likely to be delayed due to failed negotiations with the government and current market conditions.”
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