WoodMac: uncontracted demand by world’s seven largest LNG buyers to quadruple

For illustration purposes only (Image courtesy of Tokyo Gas)

Uncontracted demand by the world’s seven largest liquefied natural gas (LNG) buyers could quadruple to 80 million tonnes per annum by 2030, according to a report by the research and consultancy group Wood Mackenzie.

The major LNG buyers – CNOOC, CPC, JERA, KOGAS, PetroChina, Sinopec and Tokyo Gas – together account for more than 50 percent of the global LNG market.

After a number of quiet years, these Northeast Asian players have become active again in global LNG contracting activity, with over 16 mmtpa of contracts announced this year.

“As China pushes on towards a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term,” Wood Mackenziere’s search director, Nicholas Browne said in the report.

“Other traditional major buyers, on the other hand, are facing legacy contract expiries and will be on the hunt for a mix of contracts to lower average costs and security in supply sources,” he added.

On the supply front, Wood Mackenzie predicts that 2019 could be a record year for LNG project sanctions with over 220 mmtpa of gas targeting final investment decision (FID). Some of the less prepared or competitive projects will slip into 2020 and beyond, but nonetheless a bumper year beckons.

Frontrunners to get the green light include the $27 billion Arctic LNG-2 in Russia, at least one project in Mozambique and three in the US. Nearer to Asia, expansion and backfill projects in Australia and Papua New Guinea will also be in the running.

However, LNG suppliers will need to ensure they can meet the changing needs of major LNG buyers as they seek a variety of contracts to meet their different needs. In addition to price, factors such as contract flexibility, index, source diversification, upstream participation and seasonality will all be considerations.

“Market liberalisation and uncertainty on longer-term demand in more mature markets, such as Japan, South Korea and Taiwan, will mean more room for spot and short-term purchases,” Browne said.

“While oil indexation will continue to dominate markets due to familiarity and ability to hedge, Asian buyers should be more inclined towards hub indexation to boost diversity and enable sales into Europe.”

Browne added: “Looking forward, 2019 will be the biggest year ever, in terms of LNG capacity sanctioned, for liquefaction project FIDs. Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market.”

Share this article

Follow LNG World News

Events>

<< Feb 2019 >>
MTWTFSS
28 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 1 2 3

Downstream 2019

Renowned as the most significant global meeting place for Downstream professionals…

read more >

2nd CWC Japan LNG & Gas Summit

The highly successful CWC Japan LNG & Gas Summit returns for a second year from 19-20 February 2019 in Tokyo, Japan…

read more >

Global LNG Forum 2019

Global LNG Forum is your opportunity to see what the future of LNG will be like…

read more >

LNG2019

LNG2019 is presented by the IGU, GTI and IIR, supported by the Shanghai Government and hosted by China LNG Association, China Gas Society, The Chinese Association of Refrigeration and China Gas Association.

read more >