The demand for energy is projected to increase robustly in emerging economies, particularly China and India. Both are the largest holder, producer and consumer of coal - hence pollution is the biggest challenge in these economies. Natural gas could provide an opportunity to fuel these growing economies and could also contribute to reduction in pollution. In anticipation of higher natural gas demand due to security of supply and environmental consideration, almost all LNG producers are aggressively expanding LNG production. However, the recent natural gas discoveries and availability of other possible import avenues especially in emerging economies has raised number of question for the future prospects of LNG industry. For example, availability of imported natural gas, sizable coal reserves and weaker domestic demand for natural gas has put China in a strong position. Most recently negotiations between China and Australia's Gorgon LNG broke down on price related issues - signalling that Beijing may be attaching somewhat of a low priority to the development of natural gas market than expected by many LNG producers. The objective of this paper is to analyze the global natural gas and LNG market from both the producers and buyers perspective. It is intended to analyze how existing and new LNG producers are positioning LNG projects in anticipation of higher natural gas demand and how the natural gas consuming countries are gearing up their efforts to absorb growing volumes of gas. Should all the LNG projects including those under consideration materialize, and in view of flexibility of buyers, what are the possible implications on LNG prices and bargaining position of LNG sellers/buyers? Or are we moving back to a historical buyers market? The paper also intends to discuss the regional natural gas outlook and briefly review the challenges and opportunities ahead of LNG industry.
During the last few years, LNG industry has witnessed significant changes. Strong natural gas demand mainly driven by economic growth, security of supply and environmental consideration in particular, are most noticeable. Robust demand is mainly associated with the emerging economies of Asia, such as China and India and revival of natural gas demand in America due to stagnant domestic production, and expected decline in Canadian imports. Historically, Europe has relied on pipeline gas imports from Algeria and Russia. In the light of changing economic and geopolitical situation, major European countries, are now exploring other possible diversified import options to ensure stable and reliable supply of energy resources. LNG, due to its distinct advantages in terms of environment and energy efficiency, has become a globally traded commodity. This allows buyers greater flexibility to import from multiple sources, irrespective of location and help in mitigating security of supply issues. Due to its distinguished advantages, LNG market is likely to further flourish in meeting the growing demand of major energy consumers. At the same time the industry also likely to face stiff competition. The objective of this paper is to analyze the global natural gas and LNG market from both the producers and buyers perspective.
