TOKYO: The global LNG market is entering a period of uncertainty as the current low price environment deters investment in new supply projects, Qatar’s energy minister said on Thursday, bringing tighter supplies and price spikes in the near future.

Liquefied natural gas (LNG) prices in Asia {LNG-AS} have fallen by about 65 per cent since their peak in early 2014 to current levels of about $7.30 (Dh26.81) per million British thermal units (mmBtu).

“While the low price and oversupplied market environment will benefit consumers in the short term, it is also likely to lead to a new period of market tightness and price spikes at some point in the future,” said Qatari energy minister Mohammad Saleh Abdullah Al Sada, speaking at energy conference in Tokyo.

Prices of the super-cooled fuel are expected to stay under pressure “over the short to medium term as additional production capacity in the US and Australia comes on line”, Al Sada said.

Around 100 million tonnes a year (mtpa) of production capacity will be added by 2020 to the current production of about 300 mtpa, the minister said.

Qatar, currently the world’s largest exporter of LNG, is expected to lose its top position to Australia next year when new production from the latter comes on line.

“The combined effect of the slow global economy and rising LNG supplies will lead to an oversupplied LNG market which will take some time to rebalance,” Al Sada said.

The “uncertain environment” will curtail investment that could restrict future supplies, investment that will be needed to meet forecast LNG demand growth, said the Qatari minister.

The challenges posed by the supply glut and depressed prices have also been compounded by Asian buyers’ push to change existing contract terms that include destination restrictions and longer-term pricing.

Japan’s Jera, the world’s biggest LNG importer, has plans to cut the amount of gas it buys under long-term contracts by 42 per cent by 2030, while Osaka Gas may not sign new long-term contracts for the next few years as the market shifts towards more active spot trade.

Al Sada said, however, that such terms were necessary to allow producers to secure investments.