U.S. LNG and crude oil production may peak within two years
2023/8/15
According to Jason Feer, the director of business intelligence of the brokerage company, the three projects preparing for FID are: Venture Global's CP2 project with an annual output of 10 million tons. FID in the first quarter; Mexico Pacific LNG's 9.4 million tons/year production lines 1 and 2 are expected to undergo FID this year; Delfin Midstream plans to start up its 3.5 million tons/year floating liquefied natural gas (FLNG) production unit in 2023 one of the.
The three projects that have been completed are: Venture Global LNG's "Plaquemines LNG 2" project with an annual output of 6.7 million tons, Sempra Energy's "Port Arthur LNG" project with an annual output of 13.5 million tons, and NextDecade's "Rio Grande LNG" project with an annual output of 17.6 million tons. LNG" project.
Jason Feer said that in addition to the above six liquefaction projects, other U.S. projects are also continuing to develop, and "the growth rate is quite good". According to data from Poten & Partners, the United States signed about 36 million tons of purchase and sale agreements in the first half of this year, and the signings were "very active". The analysis found that there is a lack of traditional Asian buyers other than China in the US LNG buyer team, and European buyers still continue to rely on spot and short-term transactions. In addition, expiring contracts will drive structural changes in the market, as renewals tend to be for shorter terms, resulting in greater contract churn, making the LNG market more flexible, but also more fragmented.
According to reports, the current natural gas storage capacity in Europe has exceeded demand. Poten & Partners forecasts a slight decline in gas storage levels in Europe in 2024 compared with last year's relatively warm winter, but remains near the highs of the five-year range.
Poten & Partners adjusted its 10-year forecast for LNG demand to see Europe's LNG demand plateauing after peaking in 2026 rather than declining from mid-decade, driven in large part by Germany and its floating storage and strong demand from import facilities supported by regasification units (FSRUs). In contrast, the agency expects Southeast Asia's LNG demand to nearly triple to 61 million tonnes by 2032, with China's demand expanding to 109 million tonnes by then. It is worth noting that there could be a market downside on the back of a wider decline in Japan's LNG demand or China's greater use of pipeline gas imported from Russia.
In addition to progress in the LNG space, U.S. crude oil production is expected to hit record levels in 2024. Joe DeCarolis, an analyst at the U.S. Energy Information Administration (EIA), said: "We expect that domestic oil production will continue to grow in the near term, mainly due to higher oil prices and improved production efficiency of oil wells." Crude oil production will reach 12.8 million barrels per day in 2024 and 13.1 million barrels in 2024, higher than previously forecast.
It is understood that the above forecasts were made against the background that the rents of all oil tanker segments showed a sharp downward trend in July. Rates for VLCCs fell by an average of 20% last month, compared with 16% for Suezmaxes and 31% for Aframaxes, according to Clarksons data. The data also shows the downward trend of freight rates on all routes, among which the US Gulf to China route has the smallest decline, with VLCC rents only falling by 3%.
Rising U.S. crude production has limited the impact of OPEC's output cuts led by the world's top exporters Saudi Arabia and Russia. Exports from the U.S. Gulf region drove ton-mile growth in the VLCC market as China looked beyond traditional exporters for more crude oil. "While short-term crude tanker trends are largely determined by OPEC+, Saudi Arabia and Russia, rising Atlantic production strengthens the medium-term outlook," Clarkson said.
At the same time, EIA predicts that global oil production will increase by 1.7 million barrels per day in 2024, about two-thirds of which will come from non-OPEC countries, led by the United States, Brazil, Canada, Guyana and Norway.
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