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February 16, 2020 EnHelix Articles and Blogs

THE GROWTH OF LIQUEFIED NATURAL GAS MARKET DESPITE RECORD LOW PRICE

Natural gas develops strongly, with low-cost supplies, broad-based demand, and the cumulative availability of gas worldwide, assisted by the increasing supplies of liquefied natural gas. Over the years, liquefied natural gas (LNG) has developed rapidly and is currently part of an upheaval in the global energy market. In the last two decades, liquid natural trade has multiplied and is set to double within the next two decades.

According to the ET scenario, the average growth rate of natural gas is about 1.7% per annum – having an estimated growth rate of about 50% by 2040. The demand for natural gas is extensive, increasing in virtually all regions and countries. This increase is stimulated in mostly the same amounts by use in industry and power with transport recording the fastest growth, although in small quantities.

Presently, the production of natural gas in the world is led by the Middle East (Iran and Qatar) and the United States – who together account for nearly 50% of the growth in the production of gas over the outlook. This is also supported by the strong increase in output in Russia and China. The importance of gas trade keeps growing and this is driven by the growth of LNG supplies that account for over 15% of the total demand of gas by 2040, surpassing inter-regional pipeline deliveries in the late 2020s.

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The growth in the demand for natural gas is led by the power and industrial sector though it differs across regions and countries. According to some studies, the increased industrial need for gas is mostly driven by emerging economies. Amongst the main gas producers in the world, North America is the only country that experiences an increase in the share of gas.

Global LNG volumes are increasing considerably, promoting a more competitive, universally integrated market. The increase in the export of liquid natural gas is led by North America, closely followed by countries in the Middle East particularly Qatar alongside Africa. The Qatar and United States accounts for about 40% of all LNG exports by 2040, thus, are emerging as the major centers of LNG exports.

Asia remains the leading market for the imports of liquid natural gases, even though the imports pattern within Asia changes, with India, China and other Asian countries surpassing the more established markets of Korea and Japan.  Europe is still the main market for LNG supplies. However, the exact profile of LNG volume expansion will rest on the availability and timing of the new investment required to finance the substantial growth. The recurring nature of LNG investments shows there is a risk that the growth of the LNG market will keep being associated with periods of volatility.

The LNG global market has gradually changed in the past decades – doubling its share of global natural gas trade, multiplying in size, and being among the fastest rising segment in the energy industry. With this, EnHelix which is the leading business ERP and AI platform for most energy companies in the world supports full LNG business from contracts to economics to logistics and accounting.

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