(Montel) The global LNG market faces a shortfall in supply until the middle of the decade due to strong demand and insufficient new capacity coming online, said the deputy head of Russian energy firm Novatek.
Novatek, the leading supplier of Russian LNG, is currently building its second export terminal on the Yamal Peninsula, called Arctic LNG 2, with capacity of 20m tonnes (27.2bcm) per year.
“Obviously, there is a very tight market right now. Every day we're seeing prices continue to rise, which is a concern for many consumer nations,” Gyetvay said.
For example, the Asian benchmark JKM front-month contract was seen last at USD 15.25/MMbtu (EUR 43.83/MWh), up 20% on the month and the highest level since mid-January, on a rolling basis.
He noted that while high prices had begun to deter Chinese buyers from the spot market, more customers were entering the market from Pakistan, Bangladesh, India and Japan.
“I think they realise the prices will continue to rise in the near term so, from my perspective, the high prices so far have really not deterred gas consumption,” he said.
This was an “important element” for producers such as Novatek, seeking assurance of favourable longer-term prices for their output.
“In recent years, we were not in a rush to sell LNG volumes at low prices,” he said.
He noted there had previously been a “huge gap” between buyer and sell expectations.
“Now prices have firmed up with the market tightness [so] we should be able to conclude more contracts,” he added.
Meanwhile, Novatek’s LNG exports in the first half of 2021 declined 13% on the year to 4.3bcm amid reduced spot cargo availability from its Yamal LNG joint venture, it said in a financial report on Wednesday.