“Oil and gas companies are responding to the new market environment by cutting capital expenditure programs. Budgets for 2015 have already shrunk, but in the absence of a meaningful price recovery, deeper cuts will follow.”
“Amid squeezed cash flows, more costly, low-return projects will be cancelled. As a result, growth in global gas production is set to slow.”
“Those projects currently under construction today are set to come on stream broadly as planned, as large upfront capital costs have already been incurred. Beyond that, however, new LNG plants will struggle to get off the ground. Today LNG prices simply do not cover the capital costs of new plants.”
The IEA predicts the next 24 months will at least see some consolidation of the gas industry with the remaining operations determine supply for the coming decade.
However the report warned that if current low prices persist, LNG markets could “tighten up substantially” by 2020, the agency concluded.