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Global gas markets long-term outlook - Highlights - H1 2016

Global gas markets long-term outlook - Highlights - H1 2016

Report summary

Global gas fundamentals have shifted – creating a lower for longer outlook for LNG spot pricing, both in the Atlantic and Pacific. Wood Mackenzie believes that a significant tipping point has been reached, whereby Russia is now incentivised to pursue market share in Europe. This is due to a combination of greater LNG supply availability to Europe, lower coal prices and a higher US gas price.  We outline the levers, and the risks, in this short note.

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Volatility in oil markets and the growth of unconventional gas supply have created a high degree of uncertainty about future gas demand and the direction of gas prices.

This Gas Markets Long Term Outlook report forecasts future pricing, based on deep analysis of gas supply and demand fundamentals. Additionally, it addresses complex questions on gas flows, identifies future opportunities and informs fuel purchasing strategies.

Participants and investors can use this long term outlook report to understand gas markets and assess the impact of global gas dynamics and key market drivers.

Wood Mackenzie provides detailed supply, demand and price forecasts based on our integrated upstream, power, coal and LNG research. Our regional gas experts are based in the markets they analyse, providing comprehensive analyses of regional and global gas markets.

If you want to understand complex gas market dynamics and plan for the future, Wood Mackenzie is the premier resource to help you gain a clear, competitive advantage.

  • Executive summary
    • Introduction
    • Asian demand growth slows (again)…
    • …and LNG supply availability to Europe has grown
    • The lower coal price outlook requires very low gas prices to displace coal in Europe’s power sector…
    • …while US gas prices are expected to increase faster and rise higher, with implications for US LNG exports
    • Global fundamentals have reached a tipping point whereby Russia is incentivised to pursue market share
    • European spot prices will likely be set by US Gulf Coast LNG FOB in the medium term…
    • …while Asian spot LNG, priced off Europe, will also effectively be set by US gas price levels in the same period
    • Multiple risks exist
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Wood Mackenzie, a Verisk Analytics business, has been a trusted source of commercial intelligence for the world's natural resources sector for more than 40 years, empowering clients to make better strategic decisions with objective analysis and advice.

We work across every sector of oil, gas, power, renewables, chemicals, metals and mining, covering more than 150 countries. Our proprietary data and models are at the core of everything we do, ensuring our independent asset and company valuations are thoroughly robust and that we offer an accurate forward-looking view of economic indicators such as market supply, demand and price trends.

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