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Global LNG sector faces depressed demand and falling prices

The global liquefied natural gas (LNG) sector has been hit by supply overhang followed by COVID-19-induced economic slowdown and lower demand worldwide.

British Petroleum has pushed the timeline for its Tortue FLNG project from 2020 to 2023 in response to the COVID-19 impact. (Image source: kees torn/Flickr)

Haseeb Ahmed, oil and gas analyst at GlobalData, commented, “Due to the sharp fall in oil prices, spread between oil-indexed long-term LNG contracts and spot contracts have considerably reduced. This can make it challenging for LNG producers to meet their revenue targets. In addition, a rapid decline in gas demand is affecting financing of capital-intensive new liquefaction projects, leading to inordinate delays and capex reductions.”

To keep a check on spends, several operators are delaying their upcoming LNG projects. Operators are reducing their expenditures for 2020 as a measure to counter the impacts of COVID-19. Woodside Energy and Exxon Mobil have resorted to downsizing their capex by 60 per cent and 30 per cent, respectively, for 2020.

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Source: OilReviewAfrica

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