Wood Mackenzie warns that the number of proposed LNG projects set to made a Final Investment Decision (FID) this year and next has not reduced significantly.
The UK-based company says this is despite the outlook for global LNG demand looking increasingly subdued.
In contrast, Wood Mackenzie says up to 45 upstream oil and gas projects have seen their FID postponed so far in 2015.
“If there are no postponements the market could see an additional 100 mtpa of LNG sanctioned in the next 6-18 months, extending the likelihood of an oversupply of LNG in Asia to 2025,” Wood Mackenzie says.
Noel Tomnay, vice president global gas & LNG research for Wood Mackenzie says: “With the LNG market facing a wall of new supply just as China's gas demand growth has faltered, it is surprising how few new projects chasing FID have been postponed.
“Global LNG supply is presently around 250mtpa and there is a further 140mtpa under construction.
“For some time now we've been forecasting a soft global market. However that bearish prognosis is now being exacerbated by a demand downturn.”
Wood Mackenzie points to Asia and China, in particular, as being key to its revised outlook.
“China’s LNG import commitments are set to rise by 17% year-on-year between 2015 and 2020, from 20 to 41mtpa but China will struggle to take all this LNG so quickly,” says Tomnay.
“In contrast, China’s LNG imports fell by almost 4% year-on-year in the first half of 2015, as a consequence of subdued industrial output and fuel competition, which was driven by relatively low priced oil.
“The outlook for longer term incremental LNG demand growth in China is also being negatively affected.
And with lower industrial output and power generation competition increasingly characterising other key Asian LNG markets, like South Korea, Asian buyers are not in a hurry to finalise new LNG contracts.”
Wood Mackenzie says its view remains that the market opportunity for new LNG into Asia does not open up significantly until after 2022, with the key implication being that new project FIDs are not required until 2017 at the earliest.
