IEA: lack of LNG fleet investment could pose a threat to market development

Sabine Pass LNG export facility in the US (Image courtesy of Cheniere)

The evolution of the global natural gas market, which has been driven by the growth in liquefied natural gas (LNG) demand, continues to change the relationship between buyers and sellers, and raises new challenges for the global security of energy supplies, according to a new report by the International Energy Agency.

Global natural gas markets are being reshaped by the development of major emerging LNG buyers led by China, and the rising production and exports from the United States, IEA said in its third annual edition of the Global Gas Security Review.

China’s supply shortfall over the last winter, which triggered ripple effects around the world, highlighted the pivotal role of LNG in enhancing global gas security and flexibility of supply, the report says.

In Europe, the response to a string of cold spell episodes and unplanned gas supply outages also showed the success of integration and emergency policy measures, according to the report.

The analysis finds that, while there have been real improvements in LNG flexibility that can contribute to easing supply shortages, uncertainties remain for the future evolution of gas markets.

This includes a risk of tightening from insufficient investment in production and infrastructure capacity, or questions surrounding future shipping capacity growth, a pre-condition for LNG market flexibility, the report said.

These uncertainties could have an impact on price volatility and hurt consumers – especially the most price-sensitive emerging buyers – and cause additional security concerns, it said.

 

Timely investment in the LNG carrier fleet needed

 

The report also addresses how LNG markets are reshaping shipping needs.

“The risk of a lack of timely investment in the LNG carrier fleet could pose a threat to market development and security of supply, which could materialise even earlier than the risk of insufficient liquefaction capacity,” the report said.

To address these issues, supply flexibility remains a key prerequisite to ensure further global gas trade development and security.

Yet the priorities in terms of flexibility differ for long-term traditional buyers who seek the removal of destination clauses, and new emerging buyers whose priority is more focused on procuring short-term supply, usually for prompt execution, it said.

 

 

Share this article

Follow LNG World News

Events>

<< Nov 2018 >>
MTWTFSS
29 30 31 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 1 2

The International Gas Cooperation Summit (IGCS)

The Summit will put the objectives of South Africa and the region at the forefront of international gas development…

read more >

LNG Supply, Transport & Storage South Asia Forum 2018

LNG Supply, Transport & Storage South Asia Forum 2018 will address and propagate LNG imports…

read more >

The Nineteenth CWC World LNG Summit & Awards Evening

The CWC World LNG Summit & Awards Evening is recognised as the premier end of year gathering for the global LNG industry.

read more >

LNG India Summit 2018

After three successful editions, LNG Summit is back with yet another edition for chief LNG…

read more >