Globalization of LNG: Future Fuel, Today

Energy experts around the globe agree: natural gas is now considered a foundation fuel, rather than a bridge fuel or the fuel of the future.

With energy policies weighing in heavily towards a carbon-constrained future, natural gas is a clear leader, offering benefits for the environment, energy security and trade opportunities.

Industry research suggests that demand for Liquefied Natural Gas (LNG) is forecast to rise by 4.6 percent annually over the next 15 years, faster than the overall gas market (2.5 percent). In 2010, LNG’s share of the global gas supply was 9 percent; by 2030 it is expected to account for 15 percent.

Reports also point to the rapid growth of both LNG producing and importing countries. The number of producing and importing countries has doubled in the past fifteen years, and industry experts anticipate that this growth will continue.

“Trade by pipeline and LNG tankers has burgeoned across the world. LNG today provides half of Europe’s natural gas imports, whilst Japan – one of the world’s largest energy consumers – has placed a high priority on importing LNG from the USA following the Fukushima disaster,” Jay Copan, Executive Director of LNG 17.

The LNG market is historically segmented into the Atlantic Basin and Asia Pacific markets, with minimal trade between the two. However, the future is such that LNG cargoes will be traded between the two due to the high LNG price premium in Asia and surplus supply and subdued gas consumption in the Atlantic Basin.

LNG is now global business. The recent financial, economic and environmental crises have presented a challenge to fuel supplies around the world, and LNG has emerged as a viable source of energy for many countries.

“What was once a very rigid, traditional, inflexible market – essentially a number of separate regional markets, has become a much more interconnected market by 2012 – and will become increasingly so over the coming years as its flexibility increases,” said Copan.

The widening and deepening of the Panama Canal, which will take place in 2014 immediately shortens the distances for LNG cargo flows, and makes the Canal accessible to over 88 percent of today’s LNG fleet rather than the current 9 percent. Australia’s rise as a prime contender against Qatar as the world’s largest LNG producer with 40 percent more LNG supply capacity and the emergence of massive natural gas discoveries offshore East Africa in Tanzania and Mozambique – all factor into the rapidly evolving landscape.

“The discovery of shale gas in China and America who are traditional importers may bring new volumes into the market,” Copan continued.

“With the increasing globalization of LNG upon us, it is essential for players to understand the fundamental legal, commercial and technical issues. This knowledge will help them identify the concerns and new developments in the relevant market, to analyze risks and commercial positions rationally and to make informed and prudent decisions about LNG trade,” said Copan.

The 17th International Conference and Exhibition on Liquefied Natural Gas (LNG 17), taking place from April 16 – 19, 2013 in Houston, Texas, will set the stage for the future dynamics of the industry. It offers over 200 conference sessions spanning strategic, technical and commercial issues – including growing gas demand, new market opportunities, new applications and innovations.

At LNG 17, The Globalization of LNG and the Emerging Markets: Drivers and Obstacles co-chaired by Ieda Gomes, Director, Energix Strategy Ltd and Enrique Dameno, LNG Supply & Sales Director, Repsol is a three-hour conference workshop which will feature highly distinguished panelists and speakers tackling pressing current day global industry issues, including:

• India – A Fast Growing LNG Market: Outlook for 2015 – Mr. B C Tripathi, Chairman of GAIL
• Key Challenges for the Development of LNG in Emerging Markets: A Medium and Long Term Outlook – Mr. Fereidoun Fesharaki ,CEO FACTS
• How LNG Suppliers are Managing their Portfolio to Meet Emerging Markets Requirements – Mr. Victor Tuñon Valladares , Executive Director for Worldwide Gas Business, Gas Natural Fenosa.
• Long term LNG Supplies, Prices and Competitiveness – Mr. Jonathan Shepard, Chief Operating Officer, LNG, BP plc.
• Chile: A Successful Niche Market for LNG – Mr Antonio Bacigalupo, General Manager, Quintero LNG
• Decoupling From Oil Price: Introduction Gas-to-Gas Competition to LNG Pricing in China – Mr. Chen Bo, Vice President, UNIPEC/Sinopec

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LNG World News Staff, February 01, 2013; Image: LNG 17