LNG Supply, Demand, Pricing & Trading

Memo

The LNG business is changing in response to the impact of the Covid-19 crisis, Russia’s invasion of Ukraine and energy transition. As the world economy recovers from Covid-19, the demand for natural gas and LNG is growing but delays in taking a Final Investment Decision (FID) on new liquefaction projects and in the progress of capacity under construction since 2020 has slowed the expected increase in supply over the next 3 or 4 years. Russia’s invasion of Ukraine has boosted LNG demand as Europe turns to LNG replace the reduction in pipeline gas supply from Russia, which had been the region’s largest sources of natural gas imports. In the longer-term, energy transition is putting pressure on all parts of the LNG chain to reduce emissions and is leaving buyers of LNG uncertain whether to enter into new long-term contracts, which in many cases requires the commitment to supply well into the 2040s when many countries will be moving to net-zero emissions if they are to meet targets they are setting.   LNG supply and demand in 2022 increased by 5.5% (20.6 mt), similar to the 18 mt (5.1%) increase in 2021. It took total global activity to 394 mt. However, the global outcome does not tell the full story as the major switch in trade flows with Europe’s imports increasing by 46 mt (60.5%) in 2022 while Asia, which had been the main source of import growth, saw a decline of 18 mt (6.7%) led by China where they fell by 15.5 mt (19.5). However, market prices in Europe and Asia have been volatile hitting record low of $2/MMBtu in 2020 as demand fell because of Covid-19 but soaring to $70/MMBtu in 2022 as buyers competed to secure scarce supply. Spot charter rates for LNG ships have similarly varied over a wide range since 2019.   But what is the outlook for the business? Will the turmoil of the last 3 years continue or will the commissioning of the 170 mtpa of capacity under construction in April 2023 lead to a more balanced market and prices varying over a narrower range that we have seen recently? The online course will, over 6 sessions, try to answer these questions. It will focus on commercial issues, but technology and shipping will also be covered. It will consider the outlook for the business over the period to 2040 in terms of markets, sources of supply, pricing and trading and the response to energy transition. It is designed not only for newcomers to LNG but also those who want to refresh their knowledge or who have experience in one part of the business or one region and want to widen their knowledge.