The future role of LNG in the European gas market, the role of Russia and the pricing and supply of liquefied natural gas will be amongst the discussions by the industry’s leading LNG experts at the European Gas Conference in Vienna on 29 January.
According to the chairman of the LNG Focus Day, Independent Consultant David Ledesma , LNG imports into Europe represent an important source of flexible gas, giving gas supply diversity from Europe’s traditional pipeline gas suppliers. He says: “LNG gives flexibility of supply and enables buyers and traders to arbitrage cargoes between different regions globally. Asia, as a firm buyer of LNG will usually be able to outbid Europe for short-term cargoes, thus reducing LNG’s role as a secure gas supply source in the hub based markets of North-West Europe.”
A question that often comes up in industry discussions is whether there is too much LNG or not enough? According to Ledesma the LNG market will be balanced, “what changes is the amount of available LNG that is being marketed at any one time” . He explains: “due to the low number of new LNG projects being sanctioned during the period 2008-2010, and delays in the construction of new LNG projects (especially in Australia) new LNG supply will be limited over the coming years and this will constrain the volume of un-contracted LNG available for the flexible markets of north-west Europe. If new projects are sanctioned over the coming years, this position should ease in 2018.”
“The difficult equilibrium between LNG sellers and LNG buyers, like in any market, is done through prices” says Guy Broggi, a Senior Advisor in TOTAL SA’s LNG Division. He continues: “Currently there are many ?orphan’ gas reserves from Arctic regions to East Africa and the East Mediterranean Sea which are aiming to be shipped to markets through new LNG projects, rewarding their owners and the host states with cash.”
According to Mr Broggi the stakeholders of each LNG project are working hard to make FID possible by trying to convince future buyers to commit to take and pay the future production at prices sufficient to sustain the increasing costs of field development, liquefaction plants and new LNG tankers construction. He says: “Asian buyers will decide which projects they favour and European buyers will swallow the remaining quantities, if any. Remember that in many countries, LNG is just a ‘nice to have’, in competition to pipeline imports. Thus the difficult question of price for equilibrium.”
LNG Focus day discussion theme highlights:
More confirmed panelists and speakers:
[mappress] LNG World News Staff, December 07, 2012