The vanishing LNG market in Brazil

Over the past two to three years growing LNG demand in South America has provided an important outlet for LNG supply, in particular in 2016 when the majority of new US LNG exports ended up being delivered to the region. However, towards the end of the year and into 2017 that extra demand has fallen sharply, due to a number of factors discussed in this Comment. The overall conclusion, though, is that just as the much anticipated wave of new LNG projects is set to come online, so one of the major growth markets has gone into decline. This may be a temporary phenomenon, as it has much to do with weather patterns and economic growth, but the rise in Brazilian domestic gas production suggests that at least one longer term trend is pointing toward lower LNG requirements, at least in the short to medium term. This Comment assesses the overall state of Brazilian (and Argentinian) LNG demand and discusses the potential impact on regional and global gas markets.

By: Ieda Gomes

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