• 2012 November 9 17:08

    Global LNG market to grow 4 percent a year

    The global market for liquefied natural gas (LNG) will shift further to Asia by 2020, where high prices will attract new supply sources, while Europe will remain dependent on pipeline supplies and North America will become a marginal LNG exporter, Reuters reports.

    Trading in LNG will rise by over 4 percent per year between now and 2020, with Asia taking the lion's share, said Jason Gammel, an analyst at Australian bank Macquarie (MQG.AX).

    The value of LNG cargoes will rise to around $325 billion, up from $250 billion in 2011, based on global supplies of 460 million tonnes per annum and an oil-linked contract price around $15 a million British thermal units (mmBtu), Gammel said.

    "The Pacific is the main area of LNG supply growth, (and) the share of global LNG absorbed by the Pacific and Middle East increases, reducing the LNG volume available to the Atlantic," energy research and consultancy firm Wood Mackenzie said.

    With Japan and South Korea, the world's two top buyers of LNG, and the economic rise of China and India, as well as other emerging Asian economies, the Asian gas market will remain tight for the foreseeable future.

    "From 2010 to 2020, China's gas consumption should move from the level of Japan to the EU (and) in 2020 China should be the third worldwide consumer after the U.S. and EU," Thierry Bros, energy analyst at French Bank Societe Generale (SOGN.PA) said in his 2012 book 'After the U.S. Shale Gas Revolution'.

    The boom means that Asia will have to tap any gas it can get its hands on in order to meet soaring demand, and the high Asian LNG prices this entails will attract the lion's share of shipments from LNG exporters.

    In Europe, analysts say that pipeline supplies are likely to remain the main source although LNG imports will also play an important role, especially in Britain, where domestic supplies are dwindling fast.

    BP (BP.L) said in its 2012 Energy Outlook that European pipeline imports would still be around 2.5 times as high as imports from LNG in 2020.

    In North America, where domestic shale gas has led to a sharp price drop, a dash for gas will mean that the United States uses most of its gas for itself, although it could become a mid-sized LNG exporter, mainly selling to Asia.

    While most of shale gas and LNG development in North America has been centred on the U.S., analysts say that Canada could become the new focus.

    "Canadian LNG projects could leverage off the massive gas resource that has emerged in western Canada," said Hugh Hopewell, Senior Upstream Research Analyst for Wood Mackenzie.

    Although Hopewell said that developing Canadian LNG would require large infrastructure investments, he added that "the region is home to huge potential," including large shale gas deposits.

    COSTS SUPPORT FLOWS TO ASIA

    Increased focus on Asian LNG trading is further supported by marginal costs for new export terminals that are expected to come to market in the next years.

    With marginal costs around $4 per mmBtu, American LNG exports are much cheaper than East Africa's or Australia's, but as shipping costs and fees have to be added to the bill, U.S. exports will struggle to compete with European spot prices around $9, leaving only Asia as a viable export destination.

    Additionally, lobbying pressure to keep the gas for domestic use is likely to see a cap on U.S. exports.

    "The U.S. is only going to be a marginal player in the LNG market. They are currently going through a 'dash for gas' just as Britain did 20 years ago and will most likely want to keep most of it to use themselves," Dominic Nash of UK investment bank Liberum Capital said.

    Analysts say that the U.S. is unlikely to export more than 40 to 80 bcm of LNG for export each year between 2015 and 2020, equivalent to one or two percent of global gas demand.

    U.S. energy company Cheniere (LNG.A), which owns the Sabine Pass LNG export terminal in Louisiana, hopes to begin exporting LNG in 2015 and is currently the only U.S. facility with an LNG export license.

    Company data shows that it has contracted around 16 million tonnes of LNG per year to partners such as Britain's BG Group (BG.L), Spain's Gas Natural (GAS.MC) and South Korea's KOGAS.

    Sources say that most of this gas will be shipped to Asia.

    With a total annual production capacity of 17 million tonnes, that would only leave Cheniere with an excess capacity of one million tonnes to supply on a spot market basis.

    Current low gas prices in the U.S. could also come to an end as the demand side adjusts to the newly available supplies.

    The U.S. has traditionally depended heavily on coal-fired power generation, but cheap shale gas means that utilities will increasingly invest into gas-fired generation when building new plants.

    The forward curve for U.S. natural gas already shows prices that will begin to converge with Europe's.

    For the next three years, U.S. wholesale gas prices are expected to rise between 4 and 9 percent per year, while Britain's prices are expected to rise between 1.6 and 5 percent.

    Deutsche Bank (DBKGn.DE) estimated U.S. LNG exports would cost $9 to $10 per mmbtu between 2016 and 2018, similar to its estimates for British NBP hub spot gas prices, Europe's benchmark gas trading hub.

    With marginal costs of around $10 per mmBtu Australia, the country with the highest expected export increase, also has some of the highest marginal costs in the world, so its LNG will almost exclusively go to Asian buyers.

    The outlook for East Africa, where large recent gas discoveries have spurred the hopes for a gas bonanza in Mozambique and Tanzania, is similar.

    Even if East African gas can be brought to market before 2020, which most analysts doubt, its marginal costs of over $7 per mmBtu will mean that it will only be profitable to sell its gas to buyers in Asia, most probably India, the closest Asian LNG market.


2024 March 28

18:05 Jan De Nul, ENGIE and Equans launch a pilot project centred around the use of Vanadium Redox Flow batteries
17:35 Latvian port equipment manufacturer Bleste introduces new bulk handling ‘bucket’
17:05 Investors upgrade Navios Maritime Partners
16:25 DEME reports 22% increase in the orderbook and a record-high turnover of 3.3 billion euros in 2023
16:14 MABUX: Bunker Outlook, Week 13, 2024
15:41 AD Ports Group announced the opening of Saadiyat Marina & Ferry Terminal and Rabdan Marina
15:11 Sydney invests $11.5 million in two new operational vessels designed by Incat Crowther
14:55 China’s Jinzhao wins Peru $405m port construction contract
14:13 APM Terminals Moín handled six million TEU
13:48 ClassNK grants Innovation Endorsements for Products & Solutions to two innovative initiatives by MOL
13:37 Konecranes launches its flagship Konecranes X-series industrial crane
12:53 United European Car Carriers UECC spearheads collaboration with industry leaders to advance CNSL as a sustainable marine fuel
12:26 Ocean Network Express announces Transpacific service
11:48 Yang Ming announces 2025 Trans-Pacific service network
11:24 Fincantieri signs contract for the supply of two PPAs to Indonesia
10:42 Maersk transported more than 660,000 TEU using clean fuel in 2023
10:23 Documentation delays push industry costs to $3bn
09:48 PONANT and FARWIND Energy partner to develop green hydrogen refueling solutions

2024 March 27

18:22 Bureau Veritas awards world’s first prototype certification for SolarDuck’s floating offshore solar solution
17:58 The recently converted Allseas's shallow water pipelay barge starts preparations for its first commercial project
17:38 The Port of Rotterdam calls on the European Commission and Parliament to focus on actively promoting green energy
15:23 SEFE to become sole shareholder of WIGA
14:53 Ocean Installer secures yet another SLM contract with Equinor
14:23 Cadeler signs offshore wind turbine installation contract for the vessel Wind Scylla
13:42 Carnival Cruise Line orders 5th Excel-class cruise ship
13:11 Maersk and MSC overcharging cargo owners for EU ETS, says T&E
12:52 The Port Authority of Valencia launches the ZAL project in the Port of Valencia
12:11 Clarkson Port Services and Peak Group collaborate to deliver Port Agency services across the North Sea
11:42 Wan Hai Lines holds ship naming ceremony for new vessels
11:24 Consolidated shipping lines EBIT loss was $1.44 billion in Q4 2023: Sea-Intelligence
10:49 Seaspan Shipyards receives long-term contracts for the pre-construction work of the the Canadian Coast Guard's first six multi-mission vessels
10:14 Woodside completes sale of 10% scarborough interest

2024 March 26

18:02 COSCO Shipping Lines introduces new Americas service
17:30 Davie awarded first contract for design of icebreaker fleet under Canada’s National Shipbuilding Strategy
17:04 Sanctions complicate Arctic LNG ship sales, Hanwha Ocean says - Bloomberg
16:57 Terntank places an order for 1+1 additional wind/ methanol-ready hybrid tanker
16:28 BW LNG completes acquisition of two TFDE vessels from Stena Bulk
15:50 Hanwha Ocean develops VR-based special vehicle simulator
15:20 TotalEnergies and SINOPEC join forces to produce sustainable jet fuel at a SINOPEC's refinery
14:52 Wärtsilä Lifecycle Agreement to guarantee operational reliability of new wind farm installation vessel
14:23 Hudong-Zhonghua launches two LNG carriers
13:51 Cargo ship hits Baltimore’s Key Bridge
13:12 Final sanctioned tanker with Russian Sokol oil to reach China port - Reuters
12:42 Adani Ports acquires 95% of Odisha's Gopalpur Port from SP Group for $162 million
12:21 IHI and Yara Clean Ammonia agree to jointly assess clean ammonia business collaboration
11:41 Yara Clean Ammonia and Azane granted safety permit to build world's first low emission ammonia bunkering terminal
11:16 Wartsila and Royal Caribbean Group celebrate 15 years of collaboration on digital transformation
10:46 A global carbon tax on shipping is coming, says ABS Chairman and CEO
10:21 Eni, Fincantieri and RINA establish partnership for maritime transport decarbonization

2024 March 25

18:07 The Maritime and Port Authority of Singapore continues to investigate reports of oil spills off the port of Tuas
17:31 “K” Line, NIPPON HAKUYO and OPT Gate sign an agreement for a new fire detection system for car carriers
17:07 Greek merchant fleet recorded slight decline in January 2024
16:47 Hanwha Ocean Plans to develop green technology and naval ships
16:25 U-Ming Singapore and ITOCHU sign milestone MoU for the joint development of ammonia dual-fuel and de-carbonized vessels
15:34 Svitzer targets methanol-fuelled MAN 175DF-M engine for tug application
15:04 Wallenius Wilhelmsen signs contracts for four 9,300 CEU vessels with China Merchants Jinling Shipyard
14:40 Taiwan International Port to upgrade terminal facility at Kaohsiung
13:59 Сruise ship Carnival Freedom catches fire near Bahamas
12:59 Hanwha Ocean wins 2.4 tln-won order for 8 LNG ships
11:16 Inland Ports meet in Paris to talk about the innovation potential of inland ports
10:50 IMO agrees possible outline for maritime “net-zero framework”
10:24 Hapag-Lloyd to continue to avoid the Red Sea route
09:58 QatarEnergy enters time charter agreements with Nakilat for the operation of 25 LNG vessels

2024 March 24

16:18 Inchgreen Marine Park upgraded as part of £11m investment
15:14 A ribbon-cutting ceremony for Solent Rail Terminal Rail was held at the Port of Southampton
14:08 ESNA and Strategic Marine join forces to offer Surface Effect Ship (“SES”) Crew Transfer Vessels (“CTV”) to the market
13:07 First LNG powered vessel calls at HIP
12:49 Inter-array cable installation completed at Neart na Gaoithe offshore wind farm
11:32 Equinor ASA posts net income at USD 11.9 billion in 2023
09:25 Edda Wind announces the sale of Edda Passat