New LNG markets, greater cooperation and the development of new liquefied natural gas ecosystems have the potential support growth in LNG demand and provide a sustainable LNG future, according to Seah Moon Ming, CEO of Pavilion Energy.
Speaking at the LNG Producer-Consumer Conference in Tokyo, he said that in today’s low-price and oversupply environment, these three opportunities can help in full realization of the potential of LNG.
Emerging markets, an opportunity for growth
For a sustainable LNG future, there is a need to look beyond traditional liquefied natural gas spaces to new markets, Ming said, noting that the spotlight so far has been on rising Asian demand.
He noted that the low oil prices in the past two years have slowed down the entry of gas into the transportation sector, however, the recent IMO ruling to impose a 0.5 percent sulfur cap starting in 2020 has stressed the potential of high demand for gas as fuel for ships.
“Together with the increased use of gas in trucking, we are looking at new LNG demand of 50 mtpa being created by 2020, growing to reach 100 mtpa by 2030, in the transportation sector,” he said.
Small-scale LNG in Southeast Asia is another promise-showing sector as there are a number of remote islands in need of power. Although the demand on Indonesia’s scattered islands is small in individual quantities, collectively it is a market representing an opportunity for growth.
For its part, Singapore’s Pavilion Energy, a unit of Temasek, has secured a bunkering license from the Maritime Port Authority of Singapore to deliver LNG to ships in the port of Singapore, and is developing LNG bunker supply and delivery models.
In Indonesia, the company has signed a memorandum of understanding with Pertamina to work on small-scale LNG projects.
Asian LNG trades to be underpinned by cooperation
LNG prices in Asia have come significantly down since 2012 when buyers in the region paid a US$120 billion premium. Japan, the world’s largest LNG importer is aiming to become an LNG trading hub, due to the number of LNG cargoes it transacts, Seah Moon Ming said.
With this in mind, he added, that LNG trade flows within Asia could be supported by several hubs in the region. However, “the success of an Asian LNG hub framework will depend on the region’s commitment in recognizing the benefits of these hubs in price discovery,” he said.
He noted the recent cooperation agreement signed between Singapore Exchange and Japan’s TOCOM to develop Asian LNG market and explore opportunities to co-list LNG derivatives. This puts Asian hubs in the position to become “a key benchmark for transparent and fair LNG pricing in the region.”
LNG ecosystems to boost realization of LNG’s potential
From 2013 to 2040, total energy demand in Southeast Asia will grow by 80 percent, the CEO said.
Promoting the transition from traditional fossil fuels to natural gas has a positive environmental impact, but also stimulates investment into the LNG sector.
“There is a clear need to shift our thinking away from just supply-demand dynamics, but towards investing ahead for a clean and sustainable future,” Seah Moon Ming said.
The focus should be put on developing LNG solutions including transportation, marine fuel and building LNG ecosystems that can be introduced into emerging markets as a turn-key solution for supplying LNG as well as generating and distributing electricity to emerging markets.
A close regional cooperation involving stakeholders across governments and private sectors could bring success to such an ecosystem, according to Ming.
In conclusion, he said that the future for LNG remains positive, with the development of new and alternative markets for LNG.
LNG World News Staff