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EIA sharply raises 2009 U.S. LNG import estimate

Tue Apr 14, 2009 2:43pm BST

NEW YORK, April 14 (Reuters) - The U.S. Energy Information Administration has raised its projections for liquefied natural gas imports in 2009, citing falling demand elsewhere as new global production comes online.

The EIA expects imports of the super-cooled gas to increase 36 percent to about 480 billion cubic feet this year, up from 352 bcf in 2008, it said in its April Short Term Energy Outlook.

In its March outlook, the EIA forecast only 380 bcf of LNG imports.

“Depressed LNG demand in Asia and Europe should tend to increase the amount of LNG available to the United States,” the report said, adding that new liquefaction capacity coming online will also help boost U.S. imports.

The United States tends to be the LNG market of last resort as producers send LNG to the higher paying Asian and European markets first.

However, global LNG demand and prices have fallen this year, potentially leaving more LNG for the United States whose extensive storage and pipeline network means it can absorb LNG even at times of low demand.

This has coincided with new production projects coming online in Russia, Qatar and, later in the year, Yemen and Indonesia, though the later projects could be subject to further delays.

“The LNG projection is subject to considerable uncertainty. Initial production from new liquefaction capacity has been slowed or delayed for extended periods, and U.S. natural gas demand is also projected to be lower in 2009.”

The market is concerned that increased LNG imports could push gas prices down further, adding to pressure from increased domestic supply and recession-driven falls in demand which have knocked 70 percent off prices over the past nine months.

However, the increase in LNG imports could be more than offset by a fall in Canadian pipeline gas imports in 2009.

The EIA sees an 11 percent drop in Canadian gas imports, from 9.86 bcf per day in 2008 to 8.78 bcf per day this year. LNG imports will likely rise to only 1.31 bcf per day compared with 0.96 bcf in 2008. (Reporting by Edward McAllister; editing by Jim Marshall)