The LNG market in 2017 is irreversibly changed, now challenging for seller and buyer alike. Gas is flooding into the market. Since 2015, seven LNG projects have started operations, another 15 are in build. LNG output could grow by more than 100 Mt by 2020 to more than 360 Mt.
There is a widening range of suppliers democratising access to LNG supply, not least infrastructure developers in the US. Global demand is growing, but more slowly than perhaps anticipated, and the market is fragmenting.
Big legacy demand centres like Japan and Korea are in decline, the newly emerging markets immature. Spot LNG prices have sunk to cyclical lows, driven down by oil prices, cheap Henry Hub-linked gas on the high seas, and by the sheer volume of gas looking for a home. Producers and buyers are long of volumes. A dystopian landscape? It’s real enough now, and may get worse still.
How do traditional LNG suppliers, a group dominated by some of the biggest oil and gas producers, play a part in sorting things out? As the industry gathers in Tokyo for Gastech, we think there are four main elements that need addressed: costs, responding to buyer needs, portfolio optionality and infrastructure. Hear more from our Chief Analyst in The Edge. Visit us at Gastech 2017 to discuss the future of the global gas market and how companies should position for profitability.