Cheniere Energy Inc, the largest U.S. liquefied natural gas (LNG) company, said it expects investment in new projects worldwide to slump this year and next as the industry grapples with the coronavirus-led economic slump that has sliced 30% off worldwide fuel demand.
Cheniere also said demand for the super-cooled fuel could potentially fall in coming quarters, a reversal from years of record-setting growth, as slower economic activity and high storage inventory levels reduce the need for imports.
Before the pandemic, demand for LNG had grown sharply as nations like China and India shift away from dirtier coal for power generation and home heating.
The global recession is expected to cause investment to fall, cutting the expected growth in new projects worldwide in 2020 and 2021 to 65 million tonnes in capacity, compared with its previous forecast of about 130 million tonnes.
“Supply and demand dynamics are tightening the competitive landscape,” Cheniere’s Chief Financial Officer Anatol Feygin said on a call after the company posted first-quarter results. Cheniere’s net income nearly tripled in the quarter.
Cheniere also said that more customers had said they would not take delivery of LNG cargoes recently, but did not give a specific number. It does not expect the canceled LNG cargoes to have a material impact on its forecasted financial results for 2020, as most of its business is through long-term contracts.
During the first quarter, the company said it recognized revenue of approximately $53 million associated with canceled LNG cargoes.
Cheniere also said robust LNG supply growth over the past several years, along with warmer winters and strict virus containment measures, have caused global gas prices to drop. Gas contracts in Europe and Asia have plunged to record lows over the past week or so.
Separately, Cheniere said it still expects to complete the third liquefaction train at its Corpus Christi LNG export plant in Texas in the first half of 2021 and the sixth train at its Sabine Pass LNG export plant in Louisiana in the first half of 2023.
The company said while it was taking measures to combat the spread of the coronavirus, it was not expected to hit costs or the schedule for its Corpus Christi Train 3 or Sabine Pass Train 6.
Cheniere shares rose 1.4% in early afternoon trading on Thursday.
(Reporting by Arathy S Nair in Bengaluru and Scott DiSavino in New York Editing by Nick Zieminski and Marguerita Choy)