Tuesday, November 16, 2010

Norway Calms Natural Gas Market

Norway, the world’s second-biggest natural-gas exporter, expects increased demand will reduce a glut of the fuel more quickly than forecast by the International Energy Agency, according to its Oil Minister.
An excess of supply capacity will peak at more than 200 billion cubic meters next year, from 130 billion in 2009, before starting “a hesitant decline” to at least 150 billion in 2020, the IEA said in a report this month. The Paris-based agency defines the glut as the capacity of inter-regional pipelines and LNG export plants minus the volume of gas actually traded.
“I’m a little bit surprised to hear that the IEA is projecting a glut of natural gas for the next ten years, this is contrary to the message I get from the industry and other market advisers who say that much of the gas surplus has already disappeared,” Terje Riis-Johansen said today in an Oslo interview. “We see an imbalance in the market now, but we believe this will stabilize itself relatively soon.”
Gas for next month has tumbled 32 percent in New York this year amid rising production from U.S. shale formations and as exporters increased liquefied natural gas capacity. European gas demand dropped 5 percent, or 27 billion cubic meters last year, according to Bank of America Merrill Lynch. Global demand will return to growth this year after dropping in 2009, the IEA said.
“The size of the gas glut will go down, but it may be with us for some time to come,” Fatih Birol, chief economist at the agency, said today at a conference in Oslo.

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