Liquefied natural gas is cheap, and according to Goldman Sachs Group Inc. it’s only going to get cheaper.

A wave of new supply from Australia to the U.S. is deepening a glut of the fuel, raising the risk of losses for exporters and prompting some buyers to look at breaking contracts with suppliers, according to the Wall Street bank, which cut its forecast for prices in Asia next year by 13 percent. LNG will probably drop a further 23 percent by 2018, Goldman said.

“The struggle to create sufficient demand for LNG shows that energy policies have largely failed to deliver the promised Golden Age of gas,” the Goldman analysts including Christian Lelong wrote in the report Thursday.

The U.S. is set to start exports in January amid a flood of projects globally that Sanford C. Bernstein & Co. estimated will lead to the largest annual increase in capacity in history. Prices have fallen more than 60 percent since a peak in February of 2014 and Goldman expects them to weaken further as buyers seek to divert contracted supply or renegotiate contracts.

Goldman lowered its 2016 spot price forecast in Japan and South Korea to $6.13 per million British thermal units and now forecasts prices of $5.19 in 2017 and $4.75 in 2018 and 2019. That compares with the latest spot price of $7.45 for LNG shipped to northeast Asia, according to Energy Intelligence Group. U.S. benchmark oil and gas prices have tumbled more than 40 percent over the past year.

Coal Competition

If prices fall toward the cash cost of production, LNG can compete with coal in the power generation sector, the Goldman report said. LNG projects condense gas into liquid form at about minus 160 degrees Celsius (minus 256 Fahrenheit) so it can be shipped overseas.

The bank isn’t alone in predicting prices have further to fall. LNG may sink as low as $4 by 2017 and probably won’t rise above $8 before 2020, Fereidun Fesharaki, chairman of consultant FGE, said in an interview in September.

In the U.S., plant utilization rates are expected to be near 50 percent, while in Australia, weaker prices signal “danger” for the nation’s exporters, the bank said. The bulk of the new supply is coming from Australia, where companies including ConocoPhillips, Origin Energy Ltd., Chevron Corp. and Royal Dutch Shell Plc are spending more than $150 billion on export ventures.

Spot Cargoes

Customers may get spot LNG cargoes at much cheaper levels than existing contracts, according to a separate report Thursday by Goldman analysts including Mark Wiseman in Sydney. Goldman said it expects a greater-than-usual discount to contract prices of about 50 percent to remain.

Petronet LNG Ltd., India’s biggest importer, is saving so much money buying on the spot market that it’s willing to risk penalties for breaking long-term contracts with Qatar. The company is taking only 70 percent of the volumes it agreed to in 25-year contracts with the Persian Gulf state, potentially triggering a fine, Finance Director R.K. Garg said in September.

The International Energy Agency in 2011 envisioned the possibility of a golden age of gas.

“The market outlook has changed significantly,” according to the Goldman report. “As rising supply pushes prices down towards marginal cost, some producers may struggle to earn a return on investment and the industry will likely face a growing number of asset impairments.