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The combination of slower Asian LNG demand growth and low oil prices has developed stronger price convergence between gas spot prices in Asia and Europe. And looking ahead, 130 mmtpa of new supply can be seen coming into the market over the next 5 years, mostly from Australia and the US. As the global market absorbs all the new LNG, as it tries to balance, new floors for spot prices are likely to be tested.
We address some of the levers that will influence global gas price floor levels. This includes demand response – coal/gas competition in Europe and additional power demand in Asia including from coal displacement. It also includes supply response – from high cost gas in China, shut-in of US LNG and Russia's behaviour. We conclude that the price of coal will be a key determinant to future gas spot prices and the potential for shut-in of US LNG.
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This Gas Markets Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.
For participants, suppliers and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.
We provide 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.
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Insight | Oct 2015
Global gas spot prices - what will set the floor?
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