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6 Pages

Global gas spot prices - what will set the floor?

Global gas spot prices - what will set the floor?

Report summary

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.

What's included?

This report includes 1 file(s)

  • Global gas spot prices - what will set the floor? PDF - 466.09 KB 6 Pages, 0 Tables, 7 Figures


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.

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
  • LNG oversupply is ahead, testing new floors
  • Demand
    • Trigger prices for coal displacement in continental Europe are much lower than the UK
  • Supply
    • Social benefits and NOC competition will restrict the scale of high cost Chinese indigenous gas shut-in
    • US LNG exporters will be scrutinising their cash costs
    • Behaviour of major suppliers, most notably Russia, will remain key
  • Conclusions

In this report there are 7 tables or charts, including:

  • Executive Summary
  • LNG oversupply is ahead, testing new floors
    • Global gas dynamics – key short term demand and supply responses to 2021
  • Demand
    • Chart 1: Gas:coal competition in UK (2015-21)
    • Chart 2: Gas:coal competition in Germany (2015-21)
    • Chart 3: Gas:coal competition in Japan*
    • Chart 4: Guangdong gas vs coal economics*
  • Supply
    • Chart 5: US LNG economics into Europe
    • Chart 6: US LNG cash costs into Europe
  • Conclusions
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