Platts' Eclipse Energy Issues 2016 -- 2030 U.K., Northwest Europe Natural Gas Forecasts

Also Includes Supply-Demand Aspects of China, U.S., Russia, Australia

-- Looks at Production, Pipeline Flows, Storage --

Jul 06, 2015, 09:03 ET from Platts

LONDON, July 6, 2015 /PRNewswire/ -- European gas prices are forecast to fall in the period 2016 to 2020 to a level below that at which U.S. liquefied natural gas (LNG) exporters can make a profit, according to the latest analysis by Eclipse Energy, an analytics and forecasting unit of Platts.  

In its latest U.K. and North West Europe Long Term PricePilot, Eclipse warns that, while the U.S. will be able to export close to 100 billion cubic meters per annum (bcm/a) of LNG by the end of the current decade, it may struggle to find a home for all of the gas. With the Asian market looking well supplied in summers, and limited upside in South America, low spreads may mean U.S. exports also struggle to find a home in Europe. With U.S. LNG exports expected to provide a floor for gas prices in both Europe and Asia, this should create an unprecedented level of price convergence between the three main pricing regions.

In other key findings:

  • Northwest European gas prices are expected to fall to a level that incentivizes coal to gas switching (there is already some evidence of this in the U.K., where carbon costs are higher).
  • U.K. combined cycle gas turbine (CCGT) demand for gas will increase in the short term as gas prices fall. But post-2018, power demand for gas starts dropping off as the National Balancing Point (NBP) strengthens and new renewable, interconnector and nuclear capacity comes to market.
  • European gas production is in decline, opening up a supply gap post 2020 to be filled with LNG and pipeline gas from the East.
  • In Asia, the introduction of market deregulation will bring competition and uncertainty to the Japanese gas market; competitive supply contracts with flexibility will be key to success. This is happening at the same time as the global LNG market is expected to be well supplied and existing LNG contracts are due to expire. These factors are expected to give Asian buyers significant "power" and put pressure on traditional oil-linked Asian LNG contracts.

May Mannes, Eclipse Energy head of gas analysis said: "The startup of BG Group's Australian Queensland Curtis project late last year marked the start of the largest build-up of LNG supply capacity since gas year 2008-2009, with 10 to 12 trains due online by next summer. With demand struggling to keep pace with supply, we believe this will mark the start of a transformation of the global gas market, and drive European gas prices well below where the current forward curve indicates."

For Editors:

Eclipse Energy's Long Term PricePilot report forecasts wholesale gas prices for the U.K. and North West Europe for the period from 2016 to 2030 (with a look ahead to 2040). Eclipse's Long Term forecast uses a stacking methodology to model prices, with the report giving a comprehensive overview of the supply and demand fundamentals and the fuel/carbon price assumptions feeding into the price forecast.

The Long Term PricePilot report is just one of a suite of Eclipse products focusing on U.K. and Continental gas and power price forecasting and market analysis for the period from next month to 2030.


Global, Americas: Kathleen Tanzy, + 1 917 331 4607,

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