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Oil & gas glut post 2014

Oil & gas glut post 2014
Let’s now turn to Oil & Gas Glut post 2014. This has caused a global price drop for oil and gas. This created a “short-term oil and gas glut“ in the market since 2014, reduced the price of oil and gas and made it more attractive to import. Therefore, the global liquefied natural gas (LNG) market is currently oversupplied and stricken with low demand and prices. As the International Energy Agency (IEA) warned in the Medium-Term Gas Market Report 2015, it is difficult for gas to compete in a world of cheap coal, falling costs and continued policy support of renewables. Global gas demand is caught between cheap coal and continued policy support for renewables.
In the Medium-Term Gas Market Report 2016, the Executive Director of IEA, Fatih Birol, said, “We see massive quantities of LNG exports coming online while, despite lower gas prices, demand continues to soften in traditional markets.” Birol went on to say that the growth of gas in the power sector was being suppressed by cheap coal and growth in renewables. Countries in Asia (Northeast Asia except Japan, Southeast Asia, and South Asia) are turning to coal. Power companies in India and elsewhere in Asia are turning back to coal because it is cheap and domestically sourced. Asian power companies are building more than 500 coal-fired power plants this year alone. And more than a thousand are on the drawing board.

The global liquefied natural gas (LNG) market is currently oversupplied and stricken with low demand and prices.

LNG makes up about 10 per cent of the current total natural gas market demand, with about 241 million ton per year (mtpa) (332 bcm). China, South Korea and Japan were responsible for approximately 60 per cent of global LNG imports in 2014. Forecasts from Accenture indicate that the LNG market will grow to ~500 mtpa (~680 bcm) by 2030 and will represent 16 per cent of the global natural gas market demand by 2030 (Accenture, p. 6).

Global gas demand growth, however, has weakened considerably. The fall in gas prices has been the most dramatic in Asia. In June 2016, the International Energy Agency (IEA) released its 2016 Medium-Term Gas Market Report. The report claimed that energy policies have largely failed to deliver the promised Golden Age of natural gas. The use of LNG for power generation is challenged with coal proving resilient, more nuclear, the costs of renewables falling, and planned pipeline gas imports into China.


  • Accenture, “Gas grows up, part I: developing new sources of LNG demand,” 2016.
  • International Energy Agency (IEA). Medium-term gas market report 2016 (Paris, France: OECD/IEA, 2016).
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Global Resource Politics: the Past, Present and Future of Oil, Gas and Shale

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