LNG terminal
© Wikimedia CommonsLNG Terminal
The oil price crash triggered by the coronavirus crisis will likely have a secondary impact on liquefied natural gas (LNG) projects that were aiming for final investment decisions this year. But analysts see that short-term loss turning into a gain around mid-decade if natural gas demand in Asia continues to grow at the pace they've been predicting.

At the moment, Bloomberg reports:
"More than a dozen proposed LNG export projects from the U.S. to Mozambique are at risk of being delayed or scrapped as crude careened to levels that make most of them unprofitable. Even before crude's drop, developers were under pressure from a slump in global gas prices, milder winter temperatures, and demand restraints from the coronavirus."
S&P Global Platts analyst Jeff Moore wrote:
"With significant downward pressure on spot LNG prices and oil prices, it could be the double-whammy that really starts to make some projects seem uneconomic. If oil prices stay low for much of this year, I would imagine it could have a material impact on supply projects looking to reach [final investment decisions, or FIDs] this year."
But over the slightly longer haul, Bloomberg adds:
"If fewer of them come to fruition, that would ease a widening supply glut later this decade and potentially lift prices amid breakneck demand growth in Asia."
Before the crash, Bloomberg New Energy Finance had identified four projects likely to reach FID this year, and another 15 that might. It's now reassessing that timeline.

The news agency explains that new LNG terminals cost multiple billions of dollars to build, and "typically sell their output at a price linked to crude." Most of them are looking for prices that can't compete against today's price of oil.

Which means that
"much will depend on how long the rout lasts. While projects are financed based on long-term models because they take years to build and then operate for decades, if oil and gas prices stay at current levels throughout the year, it could force backers and financial institutions to rethink their plans."
Wood Mackenzie Research Director Angus Rodger told Bloomberg last week:
"It has been: 'times are tough now, but the world will need this LNG, so we can't let these short-term fundamentals affect the longer-term strategic decisions.'" But "if we continue rattling at the bottom, it will have an impact at some stage on companies' willingness to make large capital commitments."
On the other hand, fewer project approvals today will mean tighter global LNG supplies between 2024 and 2027 — which will translate into higher prices if demand continues to grow. Analysts at the U.S.-based brokerage firm Sanford C. Bernstein said:
"This drop in supply could be good news, as this ultimately will help bring the market into balance. And the longer it takes for projects to be approved, the better the price recovery will ultimately be for the market."