Does Asia really need US LNG export?

The United States government is considering to expand liquefied natural gas exports. North American natural gas prices have been in slump in the past couple of years due to the oversupply caused by the shale gas production.

Natural gas is globally oversupplied basically, while steady growth in China and the urgent need for thermal power due to nuclear power shortage in Japan make East Asian gas prices higher than other regions.
Increasing LNG supply from the US is likely to reduce Asian gas prices through arbitrage.

However, US LNG export won't surge immediately after the deregulation. Further LNG shipments require new gas-liquefy facilities and loading infrastructures as well as LNG carriers.

Long-term energy forecast recently provided by the Energy Information Administration predicts that the US natural gas import/export balance won't be export excess until 2020. Then gas export excess is expected to increase despite steady growth of domestic demand. US gas exports are forecasted to exceed imports 55 billion cubic meters in 2030, and exceed 95 bcf in 2040.

Natural gas prices in North America, that has been depressed by oversupply, are also expected to rise in line with the change of fundamentals. Protesters against the deregulation who afraid about higher domestic energy prices might be right.

On the other hand, even if the US increased its LNG exports, Japan may not buy a lot.
Why? As many people know, Japan has hiked LNG consumption for thermal power after the severe earthquake in March 2011 in order to make up for nuclear power shortage.

Japan's LNG imports in 2011 rose 12.2% from a year ago to 78.5 million tonnes, according to the customs data. Imports in the first ten months in this year increased 13% on year to 72.9 million tonnes. Total LNG imports in 2012 are seen to be around 87 million tonnes or 120 bcf.

Japan's LNG purchase, however, won't increase further in 2013. The country's existing LNG unloading and storage capacities won't allow to accept more imports. It's already reached to the physical ceiling.
Power saving, economic slump or resume of nuclear power plants are likely to reduce Japan's natural gas consumption in 2013 rather than increasing.

In Japan, annual 1 million tonnes of a new LNG import terminal is planned to be built in Fukushima prefecture by 2018. A 200,000 tonnes new storage facility is also planned to be installed in Hokkaido. But any other big concrete plans for LNG import infrastructure are not announced.

Meanwhile, China has been the biggest LNG consumer in Asia since 2009. Its growth of LNG demand in 2011 exceeded Japan even though the urgent demand for thermal power boosted Japan's gas consumption.

China's natural gas consumption in the first nine months 2012 rose 13.6% on year to 106.5 bcm, according to the National Development and Reform Commission. Total demand in 2012 is seen to be about 147.7 bcm. China's LNG imports in January-September surged 35.5% from a year ago to 30.5 bcm.

If China is able to continue economic growth as the government anticipated, the country's natural gas demand in 2015 is forecasted to reach to 230 bcm. But, China may not eager to look for fresh import contracts, since its gas supply capacity (domestic production and long-term import contracts) are predicted at 260 bcm in the same year.

Middle Eastern natural gas supply is also expected to increase firmly, so Asian natural gas market is likely to be already oversupply when the US will start shipping LNG to the region earnestly.

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