LIQUEFIED NATURAL GAS (LNG)

LNG Market Studies

The structure of the international LNG market strongly influences current and future LNG trade, which does not have the flexibility of the world oil market. The huge investment costs of the LNG value chain has resulted in the utilisation of long term contracts to secure financing which locks in most of the supply to specific locations. Only when there is surplus capacity in liquefaction plants and tankers can LNG be traded on a "spot" or short-term basis in addition to available capacity in the receiving terminal.

LNG trade evolved differently in the Atlantic and Pacific basins, and this continues to affect import volume, pricing systems, and contract terms. Historically the importing countries in the Pacific Basin have been totally dependent on LNG for natural gas supply while countries in the Atlantic Basin use domestic supplies and pipeline imports as well as LNG to meet natural gas demand.

Recent deals to China and India have changed traditional Asia Pacific crude oil pricing linkages, and depending on market conditions (buyers or sellers market) these changes are likely to be reflected in new deals and renewals of existing contracts. The introduction of the U.S. and U.K. into the global LNG market brings different pricing dynamics, as in both countries gas prices are set by gas to gas competition rather than by linkages to competing oil products.

Nexant Services

Nexant has considerable experience in undertaking LNG and natural gas market assessments. We employ an integrated methodology for supply and demand forecasting which gives a worldwide view of projections for energy and, more specifically, gas demand. Nexant's forecasts of supply and demand for primary energy sources are developed on a country-by-country basis, considering all pertinent market factors, including inter-fuel competitiveness, energy policies, subsidies and taxation.

Nexant maintains in-house databases on gas markets and pricing, LNG supply and demand, and LNG contracts and pricing, which, in combination with our forecasting methodology, enable us to provide clients with comprehensive assessments of the global LNG market. We are recognised as a leader in LNG market analysis, having undertaken numerous market and pricing studies for LNG supply over recent years.

Selected Project Experience

  • Market advisor—Arab Gulf LNG expansion project
  • LNG competitiveness for Southeast Asia LNG supply
  • Technical and market advisor, LNG terminal development—Spain
  • LNG Market Evaluation—South Asia
  

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