Novatek, the Russian liquefied natural gas producer, sees a global surplus of the super-chilled fuel disappearing faster than expected.
“I disagree that there is a global LNG capacity surplus,” chief executive officer Leonid Mikhelson said in an interview in Paris last week. Demand in the Asia-Pacific region is so robust that the industry’s assumptions about supply will have to be overhauled, probably within the next three years, he said.
One example of that change is China’s LNG imports, which soared 56% in the first quarter, according to Mikhelson.
An LNG glut has been an industry talking point for years with unprecedented new volumes from plants in Australia, the US and Russia. Novatek opened its $27bn Yamal LNG Arctic project last year and laid out plans for more capacity under Russian efforts to take a leading position in the global industry.
Many Asia-Pacific countries such as Bangladesh or the Philippines that previously never planned to use natural gas have signed or plan to sign sizeable LNG deals, Mikhelson said.
“Even such a major LNG consumer as Korea is now revising its energy strategy to reduce atomic generation and switch to natural gas,” the billionaire said.
Previous forecasts of a surplus were put together when the natural gas price stood between $12 and $16 per millions British thermal units, compared with a range of $7.5 to $8.5 today, he said.
“As gas producers, our objective is not to operate for the rise in prices and to compete with other energy sources rather than other LNG producers,” he said.
Novatek opened its $27bn Yamal LNG Arctic project last year and laid out plans for more capacity under Russian efforts to take a leading position in the global industry