Fall in LNG Demand in US

A huge shortfall in US demand for imported Liquid Natural Gas into the States is expected, according to an article today in the Wall Street Journal.

In 2003 Greenspan argued that due to rising prices and a shortage of Natural Gas reserves in the US, America should become a major importer of Natural Gas.

Since the US companies have invested billions into building the expensive LNG terminals that are required to receive and convert Liquid Natural Gas back into its natural form.

Increase in Domestic Production

However, since that statement rising prices encouraged the US investors to put their money into extracting the harder-to-get Natural Gas that lay in shale reserves.

In the process they got quite good at it – meaning that increased efficiency has now brought down the cost of extracting and lead to increased supplies.

All of this is happening not just at a time when global recession is leading to a major fall in demand for the fossil fuel but when new sources of Natural Gas are coming on line from a number of sources – one of which is from Qatar.

Effect on Qatar

Quite how this will affect Qatar remains to be seen. Qatar’s first port of call is Europe, where higher prices are being paid for the resource. Europe’s alternative is Russia – not averse to turning off the tap in order to come out top in local regional disputes.

However, following years of massive investment into LNG in Qatar – and with increased supplies appearing this year in other parts of the world too – it can’t be good news!

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