LNG approaching critical mass as a globalising force for natural gas By Alex Forbes
Amidst all the near-term worries of supply gluts,
Last April, at LNG 18, Perth became the first
faltering demand and weak prices, the direction
city to host the event twice. In the intervening
of travel for LNG is becoming clearer. While the
time, LNG trade trebled. According to the 2016
coming five to eight years will be a tough time
edition of the IGU World LNG Report –
for producers and the sponsors of new
launched at LNG 18 – in 2015 LNG trade grew
liquefaction projects, the long-term future for
to 245 million tonnes. The number of produc
the industry looks promising – as LNG becomes
ing countries was up to 17, despite Angola and
an ever more potent force in the globalisation
Egypt having ceased exports since 2014. The
of regional gas markets. The very factors that
number of importing countries was up to 33.
are challenging in the near term are likely to be
The shipping fleet had grown to 410 vessels,
sources of opportunity in the long term: low
and the average size of ships had expanded
gas prices will encourage market growth; low
too. Regas capacity around the world had
oil prices will accelerate moves towards new
reached 757 million tonnes per annum (Mtpa),
gas pricing mechanisms; new climate policies
with another 73 Mtpa due on stream by 2019.
will make gas more competitive with coal. That was a clear message from the LNG 18
A gathering of gas leaders
conference in Australia earlier this year.
Impressive as these numbers are, arguably the
Another was that the industry needs to work
most telling sign at LNG 18 of how important
harder to realise its full potential. “Don’t take it
LNG has become was that many IOGCs and
for granted,” cautioned one leading CEO.
NOGCs fielded not just their LNG specialists but
The triennial LNG X conferences have long
also their CEOs. In attendance – and mostly leading the
been the largest regular gatherings of the liquefied natural gas industry. Until a decade or
discussions – were Shell’s Ben van Beurden,
so ago, while LNG remained a niche industry,
Chevron’s John Watson, ConocoPhillips’ Ryan
they felt like the meetings of a select club:
Lance, Total’s Patrick Pouyanné, Petronas’s
many of the participants knew many of the
Datuk Wan Zulkiflee Wan Ariffin, Inpex’s
other participants, having got to know each
Toshiaki Kitamura, Woodside’s Peter Coleman,
other during negotiations for new projects and
RasGas’s Hamad Mubarak Al Muhannadi, Gaz
sales and purchase agreements (SPAs). The
prom Export’s Alexander Medvedev and others.
international oil and gas companies (IOGCs)
LNG 18 was as much a gathering of the world’s
and the national oil and gas companies
natural gas industry as it was an LNG conference. To those who follow closely the development
(NOGCs) would send their LNG specialists. LNG 12 in Perth, Australia in 1998 was just
of the natural gas industry, this should not
such an event. At that time, there were nine
come as a surprise. As this magazine has
LNG-exporting nations and nine importing
previously reported (International Gas, October
nations. Around 84 million tonnes of LNG were
2015 – March 2016, pages 78-89), the big
traded in that year and the shipping fleet
IOGCs are steadily becoming bigger producers
consisted of around 108 vessels.
of natural gas than they are of oil. And LNG
110 L N G a p p r o a c h i n g c r i t i c a l m a s s a s a g l o b a l i s i n g f o r c e f o r n a t u r a l g a s