Tightening market conditions, regional imbalances, corporate dynamics and implications on FIDs

2017 has been a transformational year for the global gas and LNG industry. The perspective for LNG demand growth in Asia look strong, not only from China. While Europe's burgeoning import dependency will soon result in more LNG imports requirements. This means the prospect of an LNG oversupply between 2019 and 2021 has shifted to a more modest market rebalancing. And crucially, there is a need for around 65 mmtpa of pre-FID LNG supply by 2025, almost 20 mmtpa more than our previous update. But despite improved market fundamentals, we see limited upside to current level of oil indexation for long term contracts. Not all this demand will translate in requirements for long term contracts while supply competition, including from competitive Henry Hub linked US LNG projects, provides buyers with optionality. The market has not quite turned into a sellers market. Yet.