Howe Robinson Partners senior broker for LNG Debbie Turner cited the Trump effect, lagging project timelines and climate change among the uncertainties impacting the LNG shipping market
"If somebody said to me, ‘Can you give your crystal ball reading?’, it is very difficult," Ms Turner told the delegates at Riviera’s LNG Ship/Shore Interface Conference Awards & Exhibition in London.
"Even the trading houses today say their crystal ball is going exceptionally cloudy. And the reason for this is there is so much going on," she said.
The US was a primary source of market uncertainty, according to Ms Turner, who cited an increase in LNG production from shale gas projects and the trade war tariffs being imposed ad hoc by US president Donald Trump.
"We have a fundamental change in respect to shale gas deposits in the US," she said. "They are vast, they can be coming out, but then what happens when Mr Trump puts a 25% political tax on top?"
Increased diversity of market players is another source of uncertainty, she said, pointing to the Mozambique LNG project and Qatar’s continued ramping up of production.
The third major factor, according to Ms Turner, is LNG’s image in the face of the growing threat of man-made climate change to the stability of ecosystems and the resultant impact on the global economy.
"And then obviously there is climate change. With climate change, is LNG the good boy or the bad boy?" she asked. "So we have so many different things that we have to consider now when we look at the LNG market."
Overall, she said, the demand for LNG is strong and would remain so.
With 20 countries exporting the product and 42 importing and more coming down the line, she said "everybody wants LNG".
Global capacity is set to grow to 56M tonnes by 2022 and another 63 or so million tonnes is under FID for the mid-2020s, she said.
"The growth continues. East of Suez is roughly 75% of the LNG demand, and that includes Bangladesh, Pakistan, Thailand is ramping up, you name it, Vietnam – they are all coming into play."
Moving further east, Ms Turner said China could have a huge impact on the market’s fortunes despite the ongoing trade tensions between the US and China, which she saw as potentially short-lived.
"China really is the question mark in the woodpile," she said. "We think China is going to be one of the largest countries for demand. It is already second behind Japan and it will increase. Again it depends on what happens with Mr Trump – we understand negotiations are underway – but he is also up for re-election next year, so we could just see … forgive my cynicism, but we could see a change."
A final source of uncertainty is the timing on LNG project delivery. With 14 projects expected to have reached FID by the end of 2019, Ms Turner said the delivery dates would likely be later than expected.
"As everything with LNG, with the shipping angle – our ships are ordered and they come out on time," she said. "Projects do not, which is one of the reasons why we have this lovely market and it goes up and down like a yo-yo. We could have, in theory, 184M additional tonnes by 2026. It is probably [going to come] after that time, but this is where the growth is. LNG is not going to go away, it is going to continue to grow."