KUALA LUMPUR, June 9 (Bernama) -- Demand for liquefied natural gas (LNG) in Asia-Pacific has dropped tremendously and is expected to be at between 15 and 20 million tonnes by year-end, an energy consultant said today.

Dr Fereidun Fesharaki, chairman/chief executive officer of the US-based FACTS Global Energy Group, said there would be an excess supply, which was estimated to be at between 50 and 60 million tonnes by year-end.

He said for the first half of next year, there would an oversupply of LNG as all the trains to process the LNG would be fully operational.

"At that time, I think the suppliers will have to think of new ways to sell their LNG including moving to markets like US and Europe, or stop producing it because the market in this part of the world cannot take the volume," he told reporters on the sidelines of the 14th Asia Oil & Gas Conference here today.

Fesharaki said this in response to a question on the LNG outlook this year as more buyers deferred LNG contracts due to the impact of global economic crisis.

FACTS Global Energy Group, an energy market consultant, services over 175 retainer clients worldwide and has the expertise to undertake substantive research studies and project evaluations.

According to Bank of America-Merrill Lynch reports, Asian LNG demand growth was now negative from seven percent year-on-year last year.

The drop was most pronounced in Japan, South Korea and Taiwan, which together made up 60 percent of the global LNG market.

Meanwhile, Petronas gas business vice president, Datuk Wan Zulkiflee Wan Ariffin, said reducing LNG production was among the options for oil and gas producers in terms of flexibility in dealing with the current market conditions.

"It was an option (cutting LNG production) because the market is so fluid for the past few months. We will see if there is a need to cut back. So far (what we do) is doing more maintenance work," he said.

Earlier, Wan Zulkiflee, who is one of the panelists at the session on "Natural Gas: Suppliers' perspective", said sellers must be flexible when dealing with their long-term customers, especially under the current market conditions.

"They should be accommodating as much as possible. Besides that, producers have other options such as diverting to other markets and lowering their production," he said.

Another panellist, ExxonMobil Upstream Ventures vice president (east region), Wayne A. Harms, concurred, saying that a stronger customer-supplier relationship would get through these economic challenges.

"The suppliers who can work with customers will be the ones who will be successful in the longer term," he said, adding that Asia would be an important market as it would be the largest natural gas market in the world by 2030, to be led by China and India.

Currently, Japan is the largest LNG importer in the world.

-- BERNAMA