The LNG market is oversupplied which has strained the prices. By 2020, new LNG capacity of 120 billion tons will be added to the existing volume and Australia and the US will have the major share in the growth.
Moscow and Doha seem to have adopted the strategy of maintaining their market share through every possible means rather than production reduction and price rise. They are in a similar condition compared to Riyadh in the oil market.
For Russia, Europe’s 31 percent gas market has the prime importance and has given rise to defending its share in the European market against US LNG export to the green continent. Narrowing differences in gas prices in Asian and European markets have diverted US LNG consignments heading to the European market.
Similarly, Qatar is making efforts to maintain and increase its current share of the LNG market. Qatar’s imposing of limitation on LNG consignment destinations and binding gas prices to oil prices are negative points in the eyes of buyers who are insisting on their removals.
Qatar is set to boost export to Pakistan, Middle East, and Latin America to make up for the reduction in its Asian exports. Similar to other LNG exporters, Qatar’s unsold consignments will be shipped to Europe.
If the price war in Europe breaks out, gas prices in Europe will plunge to below 4 dollars per m/btu which will be far from 2.5 dollar per m/btu to substitute coal for Europe’s power plant sector.
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