LNG market is set to tighten next year

Energy demand in Asia was seen rising in recent weeks, which was partially triggered by the return of China to the liquefied natural gas (LNG) spot market. Easing of COVID-19 quarantine protocols in China may be the reason why the Atlantic and Pacific basins will have to compete for limited LNG next year. 

According to analysts, European countries are working on introducing LNG floating terminals to secure energy supply and welcome more cargoes next year. However, LNG imports to Europe may decrease when Asia’s appetite rebounds. 

Research fellows at Oxford Institute for Energy Studies say that even if LNG supply rises by 35 Bcm in 2023, as expected, Europe and Asia, especially China, will intensify the battle to secure gas supplies. In their views, LNG supply problems will exacerbate Europe's energy crisis. 

According to the people familiar with the matter, the average LNG price for February delivery on the Asian spot market rose by 1% to $38 per million British thermal units. CNOOC, a leading oil and gas producer in China, bought four to six LNG cargoes for delivery next year, marking the one of the largest spot market deals this year.