Will Natural Gas Suffer From Oversupply Soon?

There are many Natural gas exporting companies and many more who are planning to export it in large volumes. It seems that natural gas will decrease even more in price. I am a proponent of increased natural gas use to the maximum possible but I doubt demand growth will keep up with supply growth. My answer is to increase demand through increased use versus coal, diesel, and gasoline, especially in China and India. The technology is mature but will countries and companies follow natural gas advocates? 

I know that many will say electric vehicles are the answer but that is OK too. Natural gas will be making most of the electricity if coal use is diminished. 

Here are current natural gas exporters, and fields

LNG only https://www.energydigital.com/top10/top-10-largest-exporters-liquid-natural-gas

Reserves only https://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_proven_reserves 2016 figures

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2251rank.html 2015 figures. 

https://en.wikipedia.org/wiki/List_of_natural_gas_fields

 

 

 

Share this post


Link to post
Share on other sites

The real issue for the West is the struggle for and over the subjugation of Europe.  Russia is using, and intends to keep using, its sales of gas to Europe as both a club and a crowbar.  To accomplish that, it needs exclusive control over the pipe that brings it in, and needs to keep competitors out. As Europe's gas consumption is both for power and heat, whoever controls the gas, controls Europe. 

Some Europeans recognize the extreme danger, and see that this leads to a rebirth of the vassal-State relationship that existed with the Iron Curtain.  Those nations seek LNG, and specifically from the USA, which is regarded as the ideological rival and counterweight to the Russians  (and it is).  As long as the European States are willing to sacrifice the extra costs in shipping in LNG instead of buying Russian gas, no matter how cheap the Kremlin makes Russian gas, they will have obtained energy security, and cannot be bullied, crippled or blackmailed by the Bear.  I predict that some European States, particularly Poland, will go that route, and pay any price for freedom.  Others, specifically the Merkel regime in Germany  (which is still there, despite Merkel herself leaving the scene), will sell themselves out for cheap Russian gas  [notwithstanding that it is not really cheap, by American pricing, and only is cheap due to LNG transport costs].  

If Washington were smart about it  (I know, that is expecting quite a lot), then it would use gas sales to Europe as a big hefty crowbar, to dislodge the grasp of Russia over European energy security.  But because they are stupid, they don't do that.

Meanwhile, private firms see the interconnect between gas and security, and have stepped up to ship gas to Poland, and will expand that to the other countries there, first of the Eastern Bloc, and then to the West.  I include France in that equation. The problems with Ukraine and Russian seizing of land, disrupting the Borders of Europe since WWII  (which everybody pledged not to ever do) will continue to push Europeans to cut off trade ties with Russia.  

I also predict that Russia will proceed into an inward spiral of collapse.  It is a rapidly-aging society, with an irreversible implosion of future workers, and will shrink in territory and armed capability, except nuclear weapons. Outlier countries will spin away, and White Russia will shrivel into 3rd-world status.  Another two generations and Russia fades into history. 

  • Like 2
  • Downvote 1

Share this post


Link to post
Share on other sites

8 hours ago, Jan van Eck said:

I also predict that Russia will proceed into an inward spiral of collapse.  It is a rapidly-aging society, with an irreversible implosion of future workers, and will shrink in territory and armed capability, except nuclear weapons. Outlier countries will spin away, and White Russia will shrivel into 3rd-world status.  Another two generations and Russia fades into history. 

It's already there (3rd world in many ways), except for the faded into history bit. An animated corpse economically, oil and gas will only take them so much farther. Another country much closer to home is over reliant on military prowess to have it's way. Better to compete economically.

  • Like 3

Share this post


Link to post
Share on other sites

On 12/20/2018 at 6:18 AM, John Foote said:

It's already there (3rd world in many ways), except for the faded into history bit. An animated corpse economically, oil and gas will only take them so much farther. Another country much closer to home is over reliant on military prowess to have it's way. Better to compete economically.

America is the largest exporter of military equipment, ahead of Russia but they seem to get a lot more influence per dollar expended. Keeping the prices of oil and natural gas down seems our best way to decrease Russian influence. Our foreign policy and  CIA seems like a poor match for their aggression as in Georgia, Crimea, Donbass, Cuba, Nicaragua, Venezuela, Syria etc. 

  • Upvote 3

Share this post


Link to post
Share on other sites

Might be , that there would be some oversupply "soon" .

Mexico apparently has no Liquified Natural Gas terminal in the Gulf , and could build one to sell to the US-American East Coast . Brasil might produce crude and gas , too , and could deliver towards the USA . But until operation , time will pass for approx. three to five years . Since the USA were the first country to build LNG-tanker ships in the early 1970s , according to Wikipedia , the USA meanwhile could and should order the build of LNG tankers again , since the Jones Act had been introduced to secure shipbuilding , and probably would need to include shipbuilding technology , besides general "shipbuilding" . 

There will be probably even an oversupply of LNG-tankers soon , since the East Asian countries are building pretty many currently .

 

For the topic of getting out of the grip of Russian gas , Russia already delivers LNG by ship . The companies in Russia are not totally state owned , and some companies there might only have the possibillity to deliver by ship , since they don't own the pipelines .

 

For the race to become the world's top weapon deliverer , there usually is the monetary aspect taken into consideration , I guess If the weapon costs millions of $$ , it generates revenue , much more , than millions of assault rifles . And what about production facillities , technological licenses ( hardware vs software ) ? 

  • Like 1

Share this post


Link to post
Share on other sites

(edited)

Russia for the last 20 years is biggest economic success in Europe according to Spectator Index

 Gdp per capita has  grown 216 % since 1999 ahead of Poland and Ireland.

https://twitter.com/spectatorindex/status/968146141744308225

So lets talk about final  price of that democratic LNG in comparison with Gazprom.

All you need is to sell your LNG cheaper than 150 $ per 1.000 m3 to Europe because its breakeven for Russia according to some estimates.

I really would like to have as Putin once said a fair competition  based on final price for consumers.

If you can do it just sell your LNG cheaper than 150 $ per 1.000 in  Europe with some profit and win price war with Gazprom. 

But if you cant just shout up and dont mix polictics with bussiness like Jan van Eck always do.

He always writes on this forum a long posts but I cant find  in any of them no words about price of this democratic LNG. 

Its because the real problem with US LNG is that you need a breakeven of about 8 $ per mmbtu so something like 300 $ per 1.000 m3 but thats not my problem that your lng is so much more expensive in comparison with Gazprom gas.

So I choose the cheapest source of gas and for the time being its Gazprom.

If you really want to change my mind sell your LNG cheaper with some profit or find altenative markets in Asia where you can sell you LNG above 10 $ per mbbtu or  even higher.

Because Im not going to pay higher bills like Jan wants me to do. 

Edited by Tomasz
  • Like 1
  • Great Response! 1
  • Upvote 1

Share this post


Link to post
Share on other sites

I agree - just sell it cheaper than Russians do and dont mix geopolitcs with bussiness.

Even during Cold War USSR was a reliable source of gas and I dont see any reason why we should doubt about it now.

  • Like 1

Share this post


Link to post
Share on other sites

6 hours ago, Tomasz said:

Russia for the last 20 years is biggest economic success in Europe according to Spectator Index

 Gdp per capita has  grown 216 % since 1999 ahead of Poland and Ireland.

https://twitter.com/spectatorindex/status/968146141744308225

So lets talk about final  price of that democratic LNG in comparison with Gazprom.

All you need is to sell your LNG cheaper than 150 $ per 1.000 m3 to Europe because its breakeven for Russia according to some estimates.

I really would like to have as Putin once said a fair competition  based on final price for consumers.

If you can do it just sell your LNG cheaper than 150 $ per 1.000 in  Europe with some profit and win price war with Gazprom. 

But if you cant just shout up and dont mix polictics with bussiness like Jan van Eck always do.

He always writes on this forum a long posts but I cant find  in any of them no words about price of this democratic LNG. 

Its because the real problem with US LNG is that you need a breakeven of about 8 $ per mmbtu so something like 300 $ per 1.000 m3 but thats not my problem that your lng is so much more expensive in comparison with Gazprom gas.

So I choose the cheapest source of gas and for the time being its Gazprom.

If you really want to change my mind sell your LNG cheaper with some profit or find altenative markets in Asia where you can sell you LNG above 10 $ per mbbtu or  even higher.

Because Im not going to pay higher bills like Jan wants me to do. 

I wouldn't expect Russia to want to give up any business but I do expect our "allies" to give us more consideration. They should at least have all the import structure needed for LNG to replace Russian Gas if Russia gets aggressive with them. I would rather they buy from Egypt or Israel etc. if America cannot compete on price. 

My main point is that competition will be fierce for natural gas exports. Pipelines, as Russia has negotiated with Germany, have a great advantage. 

I generally believe in redundant energy supplies for everyone regardless of geopolitical factors. Germany could produce their own natural gas aside from their Green Party and other green sentiments. Russia was, and is the greatest enemy of fracking by other countries for obvious reasons.  

Share this post


Link to post
Share on other sites

6 hours ago, kommersant said:

I agree - just sell it cheaper than Russians do and dont mix geopolitcs with bussiness.

Even during Cold War USSR was a reliable source of gas and I dont see any reason why we should doubt about it now.

There have been periods of overpricing. Any country or business should have more than one supplier, preferably several.

Share this post


Link to post
Share on other sites

On 12/24/2018 at 9:50 PM, ronwagn said:

Russia but they seem to get a lot more influence per dollar expended.  

Of course it does. Forget whether the USA is good, noble, or whatever. The universe always seeks a counter, and Russia is really the only semi-counter to the USA for military toys, China for economics. The Athenians were done in by their arrogance as much as anything else. We Americans suffer hubris and lack of understanding or appreciating other perspectives. And I love my country, but we are generically wrong about cornering righteousness.

  • Like 3

Share this post


Link to post
Share on other sites

On 12/25/2018 at 1:07 PM, Tomasz said:

Russia for the last 20 years is biggest economic success in Europe according to Spectator Index

 Gdp per capita has  grown 216 % since 1999 ahead of Poland and Ireland.

https://twitter.com/spectatorindex/status/968146141744308225

So lets talk about final  price of that democratic LNG in comparison with Gazprom.

All you need is to sell your LNG cheaper than 150 $ per 1.000 m3 to Europe because its breakeven for Russia according to some estimates.

I really would like to have as Putin once said a fair competition  based on final price for consumers.

If you can do it just sell your LNG cheaper than 150 $ per 1.000 in  Europe with some profit and win price war with Gazprom. 

But if you cant just shout up and dont mix polictics with bussiness like Jan van Eck always do.

He always writes on this forum a long posts but I cant find  in any of them no words about price of this democratic LNG. 

Its because the real problem with US LNG is that you need a breakeven of about 8 $ per mmbtu so something like 300 $ per 1.000 m3 but thats not my problem that your lng is so much more expensive in comparison with Gazprom gas.

So I choose the cheapest source of gas and for the time being its Gazprom.

If you really want to change my mind sell your LNG cheaper with some profit or find altenative markets in Asia where you can sell you LNG above 10 $ per mbbtu or  even higher.

Because Im not going to pay higher bills like Jan wants me to do. 

With an economy that will soon be behind Spain, the future does not look good for Mother Russia. Putin will take care of his crony friends though. Russia is a fascist paradise. 

  • Upvote 1

Share this post


Link to post
Share on other sites

You have to ask yourself, why is Russia in Syria?  Once the fighting dies down, Russia will begin oil and gas pipeline and infrastructure to control the EU,  and exploit Syrians gas fields offshore.  Control the energy of your friends and enemies, you control them.  It will be interesting to see how the U.S. competes by then.  Russia will have much to deal with, since both Iran and Turkey are looking at the same trophy.  It will be a battle Royale and hopefully by then the U.S. will have all the terminals needed in the EU to deliver LNG, and the environmentalists get out of the way.  Then we may see Russia's decline going further into the gutter and they'll rethink becoming the big hegemonic giant of West and Eastern Europe.

  • Like 2
  • Upvote 1

Share this post


Link to post
Share on other sites

(edited)

At least not for China. China is expected to experience high growth in natural gas applications for at least a few years. LNG imports also increased year by year. However, it is difficult to find a suitable LNG import price in China. For most of the year, the cost of LNG is higher than the selling price  of CNG(GOVERNMENT guided price). That's ridiculous.

Edited by Ken Zou
  • Like 1

Share this post


Link to post
Share on other sites
Sign in to follow this  
Followers 0