- Bunker checklists
- World map
- Developments in ports
- Safety restrictions and impacts
- Bunkering practices
- Supply chain and infrastructure
- Funding for LNG infrastructure
- Business case
The future price of LNG delivered to ships will depend on worldwide supply and demand for LNG. Factors of influence include the geopolitical situation, regional climate policies, the role of nuclear energy, technological advances such as access to shale gas or gas hydrates, decisions on liberalisation, and access to competitive alternatives like coal and other sources of natural gas.
Today, LNG accounts for 30% of world gas trade and the figure is expected to grow. Today, global gas market can be characterised by regional price divergence. However, with growth and increased flexibility in the LNG spot market through development of new infrastructure, structural price differences like that between Europe and Asia are expected to decrease.
During the last few decades, the LNG market has been based on long-term contracts driven by the capital intensity of LNG projects and the security-of-supply arguments of importers. Following the strong expansion of liquefaction plant capacity that has taken place, gas sellers now need to find new markets. Short-term/spot trade (less than 4 years) has been one of the outcomes. However, long-term contracts are expected to remain dominant, since no supplier has yet built an LNG liquefaction plant without a certain contracted outlet. In 2008, short-term LNG trade had a global market share of 18%. Four years later, this figure was 25-30%, dominated by the Atlantic and Mideast region.
LNG pricing is subject to two main market-based mechanisms:
indexation on the basis of the oil price
gas-to-gas market on the basis of supply and demand
Countries and regions that have adopted gas-to-gas competition–based pricing, such as North America, the United Kingdom, Australia and North-West Europe, where significant volumes are traded on gas indices, are unlikely to turn away from this practice.
An important issue here is that future US exports are highly speculative at the moment. The shale gas revolution in the US has not only greatly reduced the outlook for US LNG imports, but could also transform the country into a major LNG exporter.
According to the International Gas Union (IGU), the global LNG market is expected to increase from 100 million tonnes in 2000 to almost 500 million tonnes in 2020. In 2012, global trade was 237 million tonnes, supplied by 30 liquefaction plants worldwide. As leading importers, Japan, South Korea and Taiwan are expected to remain the backbone of the global LNG market. The largest exporters are Qatar, Malaysia, Indonesia and Australia. Total liquefaction capacity growth is expected to be 30% over the period 2012-2017. Growth in Australian capacity (three liquefaction plants) is expected to outpace the rest of the world in the medium term, with 10 plants planned or under construction.
LNG uptake first on smaller vessels
Because of the capital and storage-cost implications associated with adopting LNG, uptake of this fuel is greatest on smaller vessels sailing in an ECA. According to Lloyd’s Register, the chemical/product tanker segment is expected to account for a 30% share globally by 2030.