SunSirs: LNG Market Faces Long-Term Risk of Supply-Demand Imbalance

According to the China Chemical Industry News, a representative from the Gas Exporting Countries Forum recently stated that geopolitical conflicts in the Middle East are triggering a structural contraction in global natural gas demand. As this conflict continues to escalate, it is severely disrupting the global natural gas trade landscape, leaving the liquefied natural gas (LNG) market facing a long-term risk of supply-demand imbalances.

Restricted shipping through the Strait of Hormuz and attacks on energy facilities in the Persian Gulf have completely disrupted the order of natural gas exports from the Middle East. Relevant officials have indicated that even if the conflict were to end swiftly, it would still take several months for regional natural gas exports to recover; should the conflict become a protracted stalemate, short-term supply shortages would evolve into permanent market changes, fundamentally altering the global natural gas consumption structure.

As the world’s core LNG consumer market, Asia is facing a particularly severe decline in demand. Data from shipping analytics firms indicates that Asian LNG imports in April are expected to reach just 19.03 million tons, marking the lowest monthly import volume in nearly six years.

The supply landscape is undergoing a simultaneous restructuring. With Qatar’s LNG exports restricted, global buyers have turned to US LNG, whilst making only limited purchases of Russian gas. Gas-producing nations in Africa and North Africa, which possess surplus capacity, have been unable to effectively fill the supply gap. Gas pipelines from Algeria and Libya to Europe are not operating at full capacity, and LNG production capacity in many African countries remains severely underutilized, preventing the rapid realization of their resource potential.

Some North African nations have accelerated plans to increase LNG production. Algeria is stepping up energy development through tenders for oil and gas blocks, with a target of 200 billion cubic meters of annual natural gas production by 2030; Nigeria’s LNG exports to Asia have been steadily increasing, and the country plans to raise its annual LNG production capacity from 22 million tons to 30 million tons. However, such capacity expansions are long-term plans and are unlikely to alleviate the current short-term supply tightness.

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