PERTH (miningweekly.com) – The prices of liquefied natural gas (LNG) may be put under pressure in 2015, given the relatively low oil price environment, and the uncertain demand from China, advisory firm Wood Mackenzie (WoodMac) reported this week.

In its Horizons outlook report, WoodMac analyst noted that during 2014, China’s demand for LNG grew less than 10% year-on-year, compared with an expected 17%.

Slower economic growth and a reluctance to implement environmental policies favouring gas were key factors in this less-than-stellar demand, while a mild winter and benign summer also impacted gas demand during the year.

WoodMac noted that there were now real concerns that the Chinese market would struggle to absorb all of its contracted LNG, which would double to 35-million tonnes a year, over the next three years.

“Chinese LNG buyers are actively re-marketing some of this volume outside of China, and LNG suppliers are wondering how long these growing pains will lanst,” WoodMac’s head of global gas and LNG, Noel Tomnay said.

“In 2015, the Chinese government may decide to lower gas prices, given the lower oil prices. If it does not, gas supplier margins will be protected, but at the expense of demand growth. LNG suppliers will be hoping for some cold weather in 2015,” Tomnay said.

He pointed out that robust growth was expected in the LNG market in 2015, with Australia leading the way.

The Queensland Curtis LNG project was expected to deliver its first cargo during the year, while a further three projects, including the billion-dollar Gorgon project being developed by US major Chevron, would also be brought online during 2015.

The QCLNG project would deliver about 8.5-million tonnes a year of capacity, with the Phase 1 project budgeted at $20.4-billion. First LNG shipments were scheduled for this month.

The $52-billion Gorgon project currently includes the construction of a three-train 15.6-million-tonne-a-year LNG plant on Barrow Island with the capacity to supply 275-million standard cubic feet per day of natural gas to the Western Australian market.

Tomnay noted that the exact timing and ramp-up of these volumes were uncertain, but he added that with so many projects and trains, it was inevitable that the new supply availability would be ‘lumpy’ at times.

Despite the demure demand from China in 2014, Tomnay said that the country’s long-term gas market growth prospects remained compelling, representing opportunities for LNG and pie gas.