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Global Liquefied Natural Gas (LNG) Market Assessment : LNG Supply-Demand Outlook

  • March 2015
  • -
  • Frost & Sullivan
  • -
  • 113 pages

Summary

Table of Contents

Key Findings

•Over the last 10 years, the global liquefied natural gas (LNG) industry has matured. As a result of expansion of LNG infrastructure, gas-deficit regions now have access to LNG to support their energy requirements.
•Asia-Pacific will continue to see high demand for gas as a result of significant economic growth. Japan, in particular, is likely to fulfill all its gas requirements with imported LNG. In addition, growing markets in China and India are likely to see strong LNG demand.
•As long-term LNG contracts in Asia are nearing completion, it will be the target market for LNG suppliers.
•The supplier side of the market has witnessed significant development as a result of the increased number of LNG producers.
•Technological advancements in terms of hydraulic fracturing have resulted in significant gas production from the shale gas reserves in the United States. This is a game changer as the country will no longer be gas-deficit and dependent on LNG imports.
•Given the high demand arising from Asia-Pacific, the United States is expected to emerge as one of the major LNG suppliers.
•Australia’s new liquefaction capacity is likely to come online by 2016, giving LNG buyers various supply options. However, LNG production costs in the country are high. This high-cost LNG will not be viable in a competitive environment, thereby challenging Australian LNG companies.
•The availability of excess LNG will make the markets a buyers place, where consumers will have the advantage of contracting LNG at the lowest price. In a buyers market, consumers will want to move away from crude oil-linked LNG prices, which will influence the LNG pricing mechanism.
•In future, the LNG price model is likely to become a hybrid, with a mix of Henry Hub gas-linked contracts and crude oil-linked contracts. This means that a few contracts are likely to be linked to crude oil, with lower slopes, when compared to the current slopes of x - x %. The remaining contracts are likely to be linked to Henry Hub gas prices.
•Having more supply options will not only lower LNG pries but will also make the surplus LNG available on a spot price basis.
•By 2025, these factors will significantly influence the dynamics of the LNG industry.

CEO’s Perspective

The North American shale gas boom has changed the entire landscape of the LNG industry.
Australia will play a key role in supplying LNG, with capacity additions that are likely to come online post 2015.
Emerging markets China and India will import high volumes of LNG.
The LNG price model will undergo a change as a result of excess supply in the market.
In future, LNG pricing is likely to become hybrid in nature with lower linkage to crude oil prices.

Research Objectives

•The study highlights the current status of the global LNG market. The recent infrastructure developments in the gas-rich countries have made gas an accessible commodity.
•The research service focuses on the future LNG market (till 2025). The new gas discoveries have increased the probability of supply of gas to gas-deficit countries.
•The study also discusses the emerging markets that will experience high gas demand, augmenting their dependence on LNG. Moreover, it highlights the challenges in meeting the LNG supply-demand gap.
•The LNG price model has been described in detail as every LNG contract is different depending on the region and the terms of the contract. These prices are signed on the $/MMBtu basis of LNG.

Key Questions this Study will Answer

What is the current status of the LNG market?
By 2025, will there be sufficient demand for LNG in the market? Which countries will be the major LNG importers and what will be the target LNG market?
Which suppliers will be able to meet the rising LNG demand, and will there be sufficient LNG supply to meet this demand?
What are the challenges that LNG suppliers and buyers are likely to face?
Will the new supply of LNG change the existing global trade model?
Will the LNG pricing mechanism change as a result of the new developments?

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