Energy infrastructure company Sempra Energy said on Feb. 27 the spread of coronavirus had not impacted talks with buyers of LNG, easing some worries after the virus outbreak cut gas demand in China earlier this month.
Short-term sales of LNG into China, the world’s second largest importer of the fuel, almost ground to a halt earlier in February as the outbreak slowed economic activity and hurt demand, and buyers pondered legal action to avoid having to honor purchase agreements.
However, more recently, China appeared to be slowly recovering its appetite for natural gas, with LNG imports rising last week for the first time in five.
“In terms of conversations with counterparties ... we have a long-term view about supply and demand in the middle part of the decade and we’re really dealing with people ... that have a shared view of a potential infrastructure shortage,” Sempra CEO Jeffrey Martin said.
“The virus issue hasn’t really impacted our negotiations with the customers we’re talking to.”
Cheniere Energy Inc., the biggest U.S. LNG company, said earlier this week it was too early to gauge the potential impact of the outbreak on the near-term LNG market, but the lower short-term LNG demand in China was putting additional pressure on the market.
Even before the virus spread, global gas prices had been falling for months on mild winter weather in Europe and Asia, record stockpiles in Europe and slow economic growth because of the U.S.-China trade war.
Sempra, which develops, builds and invests in natural gas liquefaction facilities, said it expects to make final investment decisions this year to build two new LNG export plants, one in the United States and one in Mexico.
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