Friday, September 26, 2014

LNG: The Changing Global Dynamics

LNG The changing Global Dynamics sets up in the backdrop of some major shifts expected in the global LNG business market place. The Shale Gas Revolution in USA as well as large discovery of conventional gas in different parts of the world, notably East Africa has brought in new dimension for the global LNG trade in coming years and following few decades. US, certainly is very interesting story as it gets ready to enter LNG export market in big way.

Australia is progressing well with a huge ramp up in its Liquefaction capacity. Russia too has tweaked its gas export policies to have a bigger pie from LNG cake. Canada too has lined up of new projects aggregating to huge new liquefaction capacity. Many years down the road- USA, Australia, Qatar and possibly East Africa, Canada and Russian would emerge as major suppliers of LNG during this century.

Will LNG market transit to ‘Buyers Market’ or the demand growth would dictate the build up of new capacities so that it continues to be ‘Suppliers Market’ or more liquid LNG market will emerge. The oil indexed base pricing is witnessing growing pressure and hub based pricing has entered the scene. Possibility of regional LNG trading hubs is being discussed and debated. The so called Very Rigid LNG SPA’s are seemingly becoming more flexible and good volume of LNG is now being traded on non long term basis.

Importing of LNG is a relatively new phenomenon for many Asian countries: India started in 2005, China in 2006, Thailand in 2011, and Indonesia & Malaysia in 2012. Japan imports the largest quantity of LNG of any nation (87.4 million tonne in 2012), accounting for around 35% of global demand. China’s growing demand for cleaner fuel, combined with new re-gasification terminals, has pushed LNG imports to a new high, which saw the country importing close to 13 million tonne in the first nine months of 2013, up by 23% compared with 2012.

Needless to say, Asia Pacific has long stood as an important LNG market for both consumers and suppliers with Japan and South Korea primary import market players, together accounting for over half of global LNG demand.

India, with around 1.2 TCM of natural gas reserves is also set to play a key role in LNG demand in the next decade. With many of the country’s largest oil and gas companies looking to expand the country’s LNG re-gasification capacity, 2013 was expected to mark a turning point for the gas retail industry, which is in growing need of more supplies. India will become significant partner in this new global dynamics of LNG. India will soon revert back to high economic growth trajectory, would strengthen its manufacturing base very significantly and gas/LNG will have growing relevance in its energy basket.

      InfralineEnergy Oil & Gas Research Team           


The views expressed here are solely those of the author in his private capacity and do not in any way represent the views of the Infraline Technologies (India) Pvt. Ltd. (organization). The organization is not liable for any use that may be made of the information contained therein and any direct/indirect consequences resulting therefrom.

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