Gas importers and exporters see stabilisied and growing global market
The head of a gas sector industry group, and executives from importing and exporting countries gathered at ADIPEC this week to consider the current complexities of global markets for natural gas and LNG.
They put a spotlight on the strategic interplay between geopolitics, energy security, and markets, offering insight into what companies and governments are thinking about LNG.
In the last five years, natural gas markets have been on a real roller coaster, and nevertheless, they have proven to be really resilient.
Demand to stay strong
His Excellency Eng. Mohamed Hamel, Secretary General at the Gas Exporting Countries Forum, opened the discussion with his observations about a market that shows both fluctuation and consistency.
“In the last five years, natural gas markets have been on a real rollercoaster; nevertheless, they have proven to be really resilient,” he said.
Global demand has been increasing steadily, he said, with expectation of a 1.6% increase this year, and 1.8% next year.
“Of course, there is a wave of new energy capacity expected in the next five years,” he said. “This is a challenge, and an opportunity.”
H.E. Eng. Hamel explained that it will induce downward pressure on prices, but opportunity exists because it will incentivise additional demand from price sensitive markets, particularly in Asia, where gas can penetrate new markets in the transportation and maritime sectors.
He listed the competitive advantages of natural gas that will sustain and expand its markets, including very low upfront costs, scalability, and easy permitting, in addition to also being the cleanest burning hydrocarbon.
Importers’ perspectives
Yumiko Yao, EO and Senior General Manager of LNG Business Dept., and President of Tokyo LNG Tanker Co., Tokyo Gas, spoke on behalf of a major gas importer. She described a basic shift in market structure.
She said that in the wake of the Russia-Ukraine conflict, Europe started purchasing on spot markets, which affected price dramatically, but the market has found a new normal.
“Europe has improved its energy facilities, and stabilised inventories,” she said. “Now they are coping with increasing contracts offering destination flexibility.”
“So for us,” she continued, “what we think is that Europe and Asia now compete for LNG, but also complement each other.
“I think we are looking at the market together and communicating better, and trying to work for mutual benefit, which is challenging, but it's good for the liquidity of the market.”
Shri Sandeep Kumar Gupta, Chairman and Managing Director at GAIL, shared insights on the global market from India’s perspective.
“Geopolitical tensions have led to increases in prices,” he said. “India is a very price sensitive market, despite the huge potential to increase its natural gas consumption because of urbanisation, because of a young demography.”
“I am very confident that when geopolitical tensions are resolved, and prices are sort of returned to normal levels, there is huge potential of natural gas growth,” he continued.
“All the growth will come into the LNG market, of which India’s current share is about 5 to 6% of total LNG trade in the world, and I think that share will double.”
Exporter’s perspective
Dr. Philip Mshelbila, Managing Director and CEO at Nigeria LNG, discussed how he sees the change in markets in recent years.
“A lot of shifts have taken place,” he said. “Those that are less price sensitive, like Europe, have basically attracted the entire spot market, and are now building behind that longer-term contracts.”
“There will likely be more medium-term and long-term changes, and some of those tend to be around how the contracting takes place,” he continued. “Since ‘22, we've looked at buyers being interested in many long-term contracts, to give them that reliability of supply that they seek.
“So we as a producer need to build in resilience against such events that will come. “We are a growing company, with 22 million tonnes per annum, and we are in the process of building a seventh train that will take us to 30 million tonnes per annum, so we are planning to bring additional supplies into the market.”
