Wood Mackenzie predicts major LNG buyers’ uncontracted demand will quadruple by 2030

These buyers are CNOOC, CPC, JERA, KOGAS, PetroChina, Sinopec and Tokyo Gas. Together, they make up over 50% of the global LNG market. Wood Mackenzie claims that, after several quiet years, these Asian players have become active again in global LNG contracting activity, with more than 16 million tpy of contracts announced in 2018.

Research director, Nicholas Browne, said: “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.

“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.”

In the statement, Wood Mackenzie claims that 2019 could also be a record year for LNG project sanctions, with more than 220 million tpy of gas aiming to reach a final investment decision (FID). Whilst it is expected that some projects will not reach this until 2020, 2019 is expected to be a big year regardless.

Those looking to reach FID next year include the US$27 billion Arctic LNG-2 project in Russia, as well as three US projects and at least one project in Mozambique. In addition to this, expansion and backfill projects in Australia and Papua New Guinea will also be in the running.

Nonetheless, Wood Mackenzie claims that LNG suppliers need to make sure that they can meet the changing requirements of major LNG buyers as they seek a number of different contracts to meet their various needs. As well as price, factors such as contract flexibility, index, source diversification, upstream participation and seasonality will all be considerations.

Browne added: “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.

“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.

“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.”

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/24122018/wood-mackenzie-predicts-major-lng-buyers-uncontracted-demand-will-quadruple-by-2030/