Kiran Stacey BarCap: Global LNG to remain balanced

Suppliers of liquified natural gas are watching the weather almost as closely as New Yorkers right now.

According to a new report by Barclays Capital, one of the only things that kept LNG demand and supply in balance in 2010 was the hellish winter in Europe and what the analysts call “exceptionally supportive weather” elsewhere.

The fact that the two did balance is a near-miracle, the report says:

2010 will go down as a year when the global LNG market somehow balanced despite expanding at seven times the rate of the previous two years.

With the North American gas glut meaning that the US is not going to soak up booming supply from the Middle East, suppliers will need both favourable weather and the continuing growth of the Chinese economy to support prices.

Qatar is set to continue ramping up capacity, with two new trains taking its global share to 30 per cent. Along with Yemen, which is also boosting production, and Peru, Qatar is expected to provide the bulk of LNG supplies globally.

But demand should also continue to grow, albeit at a slower pace, BarCap reckons. Key to this will be not only the pace of the recovery, but also continued building of regasification terminals (which turn the liquid back into gas), with 11 new ones scheduled to come online this year.

Oh, and of course, the weather:

Cold weather has again appeared in the northern hemisphere but only time will tell i it can approach the winter of 2009/2010.

Consumers and suppliers will keep a keen eye on the forecasts, urging the mercury in opposite directions.