APAC LNG demand set to boost credit profiles of producers, despite market challenges: Fitch Ratings
Dec 19, 2023
New Delhi [India], December 19 : Fitch Ratings projects a steady increase in liquefied natural gas (LNG) demand across the Asia-Pacific (APAC) region, driven by the ongoing economic recovery and the commissioning of new re-gasification facilities.
According to Fitch Ratings, this upward trajectory in demand is expected to persist in the medium term, with additional support from the markets in South and Southeast Asia, where domestic production struggles to keep pace with rising demand.
Fitch anticipates that this demand rebound will positively influence the credit profiles of Australian LNG producers, even amid their substantial investment plans.
The economic recovery across the APAC region is identified as a key driver for the gradual rise in LNG demand.
The establishment of new re-gasification facilities further contributes to this growth. The markets in South and Southeast Asia are expected to play a crucial role in sustaining medium-term demand, with an evident gap between domestic production capabilities and the burgeoning demand for LNG.
The United States, a prominent contributor to the surge in LNG supply observed in 2023, is poised to solidify its market position in the coming years.
The addition of approximately 25 million tonnes per annum of new LNG capacities is anticipated to bolster the country's supply capabilities.
Additionally, both Canada and Mexico are witnessing the operationalization of new liquefaction capacities, augmenting the availability of LNG in the APAC region.
Despite the positive outlook for increased supply, Fitch Ratings cautions that the market balance is likely to remain weak.
This could contribute to the sustained volatility of spot prices in the LNG market.
The delicate equilibrium between supply and demand, compounded by the introduction of new capacities, may create challenges for maintaining a stable market balance.
Australian LNG producers, despite facing substantial investment plans, are expected to benefit from the recovering demand scenario.
The anticipated growth in LNG consumption in the APAC region is likely to create a favourable environment for these producers, contributing positively to their credit profiles.
As the global LNG landscape evolves, with the APAC region at the forefront of demand resurgence, producers and stakeholders will navigate the complexities of market dynamics, balancing investments and production capabilities to meet the growing energy needs in the region.
