KNect365 is part of the Knowledge and Networking Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Informa
Energy Blog Natural gas, LNG, biofuels, renewables and the energy transition

LNGgc London: 2 Days Around the World of LNG

When it comes to LNG, experts can talk about so many aspects of it, it is a wonder LNGgc London only took 2 days. But each of these aspects, from infrastructure to trading, bring challenges that the LNG industry needs to address to thrive off rising global energy demand.

One of the biggest obstacles to LNG’s continued expansion is its public perception. Niall Kramer, Chief Executive Officer at the South African Oil & Gas Alliance (SAOGA) explained how there was a great deal of public resistance to prospecting and developing South Africa’s latent gas resources due to the damaging environmental effects of such projects in other parts of Africa, including the Nigerian Delta. Much of this is based on misconceptions – when engineers and environmentalists come together “under a single tent”, projects are usually able to move forward without obstruction.

Kristina Rimkunaite, Small Scale LNG Project Manager at LITGAS, described how similar misgivings arose when LNG tankers first arrived in Lithuania; she related one incident in which panicked residents dialled emergency numbers after having mistaken water vapour around an incoming LNG carrier for leaking gas.

As the world turns to gas as a transition fuel, more LNG projects are being developed. But without capital, these plans are pipeline dreams. Melanie Lovatt, Senior Finance Adviser at Poten and Partners, explained helpfully what investors are looking for in projects, but getting approval is harder than ever, especially when money is involved.

Another issue that was raised throughout the course of the congress was the shift towards shorter, SPOT contracts (contracts lasting under one year).

There was a great deal of debate about whether shorter contracts are a beneficial development or a hindrance. On the one hand, they allow greater flexibility, which is useful at times when it is hard to anticipate when peak demand will come, or how international and geopolitical events in the industry might affect the demand for LNG. But for suppliers, short-term contracts mean an uncertain future at a time of oversupply and without long-term contracts, financing infrastructures is impossible.

Europe

For Europe to achieve energy security, both long-term and short-term contracts are needed. With the US-Russia competition, cheaper long-term gas contracts are possible, but US LNG will play a key role in Europe’s energy mix.

"The EU natural gas system itself looks to be resilient enough to handle supply shocks by 2020-25", Monika Zsigri, Policy Officer at DG Energy, European Commission, said optimistically.

In the Baltics, the competition is especially sharp, as the Russian gas price dropped by more than 30% for the area. However, Kristina Rimkunaite of LITGAS explained that the countries’ decision to diversify their suppliers is an insurance policy that can result in better energy security. Still, the building of regasification terminals in Eastern Europe isn’t necessarily indicative of a shift away from pipeline gas, and stakeholders should approach such projects with cautious optimism.

Africa

As Niall Kramer of SAOGA said, there are challenges for gas and LNG projects in Africa. However, LNGgc London attendees heard first-hand from Paul Eardley-Taylor, Director of Oil & Gas in Southern Africa at Standard Bank, that despite public perception issues, many LNG projects are taking place in Africa. One of the most notable one is Mozambique’s FLNG Coral South project, which is underway with the support of the Standard Bank.

The Middle-East

Qatar and Iran own the largest gas field on Earth, North Field, and both countries have plans to expand and increase their supply levels. The Arab blockade against Qatar, however, shook the energy industry, and put the global gas security to question.

Sara Vakhshouri, President of SVB Energy International, reviewed the issue at LNGgc London. Vakhshouri concluded that despite the fact that supplies and trading was not interrupted by political actions against Qatar, the same events allowed Japan to renegotiate its contracts.

LNG photo 1 LNG photo 2

East Asia

This query by Howard Rogers, Chairman of the Natural Gas Research Programme at the Oxford Institute for Energy Studies, is answered by Liu Xiaoli, Deputy Director at the Center for Energy Economics and Development Strategy, NDRC.

To satisfy the growing energy demand, China has no choice, but to look to LNG and renewable sources because of the country’s dedication to reduce smog in its cities.

Depleting gas resources and growing demand for power makes Myanmar a large market to benefit from. From infrastructure to gas to power plants, Myanmar needs foreign investments to satisfy the public demand and industrial demand.

Australia

The second biggest gas exporter is undoubtedly a key player in global gas trading. Matthew Monteverde, VP of Generating Fuels at Argus Media, forecast that Australia’s (and Qatar’s) activities will surely affect LNG pricing, especially since Australia is planning on reducing its LNG exports to meet domestic demand.

The US

US exports are reaching further and further. First in China, now in Europe, they are expected to compete with well-established gas and LNG traders like Qatar and Australia. As more business deals hit the front page of newspapers, more infrastructure is built to facilitate trading.

Recently hit by Hurricane Harvey, Port Corpus Christi is recovering the damaged ports while working on new terminals to magnify and speed up the US’s involvement in world energy trading.

Ultimately, demand uncertainties will create market volatility, as David Ledesma, Managing Director of South-Court, said. A volatile market, however, creates opportunities, too, if traders are attentive enough to see them.

Overviewing the LNG market, Patrick Dugas, Head of LNG Trading in TOTAL’s Gas and Power Division, said: “Until 2014 everybody was paying attention to supply, surprisingly now everybody is paying attention to demand.”

Being competitive in the LNG industry, therefore needs not only excellent market acumen, but also the foresight and ability to expand and change with the market demand.

Many thanks to our speakers and sponsors, without whom LNGgc London could not have been so captivating. Your insights have been inspiring and helpful for all of us in the room.

Get articles like this by email