Oversupply of LNG in 2009

Only last week we wrote about the fall in LNG demand in the USA.

There the high prices of LNG have spurred investment in hard-to-get-at and previously neglected reserves of Natural Gas. As a result, the cost of extracting the natural gas fell and supplies rose just as expensive Liquid Natural Gas terminals were coming on line.

Now Business 247 is predicting that there will be an oversupply of Natural Gas in 2009 as new reserves come on line in both Australia and Qatar.

Rising Supply

In total there is likely to be an increase of 100 million tonnes in the supply of Liquid Natural Gas to the world - which equates to a rise of 50% over last year's production.

Much of the increase will come from Qatar, which plans to increase production from the 30 million tonnes it currently produces to 70 million tonnes by 2010.

New projects in Kuwait and Australia are also likely to come online by 2010.

A Long Term Business

Qatar has shown that is able to plan for the long term.

In this it contrasts with countries from the UK to Saudi Arabia, both of which mismanaged the use of their reserves.

Natural Gas Consumption is set to rise from 105 trillion cubic feet in 2005 to 158 trillion cubic feet in 2030.

And ironically, when revenues at home suffer from the falling price of oil and gas, Qatar's huge investments in stock markets and businesses abroad are likely to reap the benefits of those same low prices.