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By Mark Tay and Aaron Sheldrick
CHIBA, Japan, April 4 (Reuters) - The global liquefied natural gas (LNG) industry will face a shortfall in supply in about five years because low prices have kept producers from making new investments in production, major producers said on Tuesday.
Without the investments, suppliers may not be able to meet the needs of buyers such as Japan, the world's biggest LNG importer, at a time when reducing emissions from other dirtier fossil fuels will be crucial, gas majors told a conference in Chiba near Tokyo.
"Today we are facing global overcapacity that is putting pressure on prices," Total SA TOTF.PA Chairman and Patrick Pouyanne said at the Gastech conference.
As a result, "the industry is entering a period of reduced investments this could result in a lack of supply in five years "We must carry on investing for the future," he said.
LNG projects typically require billions of dollars of investment over many years of development. The industry has usually relied on long-term contracts linked to oil prices to ensure producers can get financing on favourable terms.
That has changed in recent years as buyers led by Japan and other Asian countries have been pushing for lower prices and better contract terms. The recent drop in oil prices has also meant some planned projects are not feasible.
Chevron Corp (NYSE:CVX) CVX.N Vice Chairman Michael Wirth said earlier at the conference that a "supply gap" could happen over the next few years if new LNG projects are not approved. CHART - Top Asian LNG Buyers Alliance
http://tmsnrt.rs/2mXdqgu CHART - Global LNG Outlook
http://tmsnrt.rs/2ofFm2U
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