According to industry sources, Malaysia’s state-owned energy company Petroliam Nasional Berhad (Petronas) has also curtailed some LNG production, forced by the coronavirus-related lockdowns which pummel demand and prices. The sources, however, were unable to confirm the amount of the output reduction by Petronas.
Other global LNG suppliers in the US and Australia have also reportedly started to cut output. Virus containment measures have paralyzed global economic activity and depressed gas demand for power generation, cooking, heating, transportation, and chemical production, including in the world’s biggest LNG markets such as Japan, China, South Korea, and India.
As a result, Asia’s spot LNG prices hit new record lows. The prices fell to their all-time low at $1.85/MMBtu last week as more supplies flooded the market. Analysts said that at a price of $2/MMBtu, some producers are almost unable to recover cash costs of their operations and expected some of them to shut in production soon. At the same time, global LNG demand growth is expected to slow to 2% in 2020 from 13% in 2019.
