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The LNG tanker Duhail transits the Suez Canal in this 2008 file photo. The global market for liquefied natural gas (LNG) will shift further to Asia by 2020, where high prices will attract new supply sources. (REUTERS)
The LNG tanker Duhail transits the Suez Canal in this 2008 file photo. The global market for liquefied natural gas (LNG) will shift further to Asia by 2020, where high prices will attract new supply sources. (REUTERS)

ENERGY

Global LNG market to pivot toward Asia Add to ...

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 is expected to remain dependent on pipeline supplies and North America will become a marginal LNG exporter.

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

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

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 North America, where domestic shale gas has led to a sharp price drop for natural gas, a dash for gas will mean that the U.S. 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.

 

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