Liquefied Natural Gas Overview Transcript
Liquefied Natural Gas also known as LNG is natural gas used as a key fuel for industry and power generation. It is transported by tanker.
The LNG market has grown rapidly over the past few years. This has been driven by demand from emerging markets and mature markets where domestic reserves are falling.
The growth of the trade has accelerated in recent years as buyers seek a cheaper as well as cleaner alternative to crude and oil products.
The significant rise in un-conventional gas production in the US has made it self sufficient leaving some spare volumes in the market. Waves of participants have entered the energy market to capitalise on this. These include energy-hungry state buyers in emerging markets looking for good-value contracts and financial institutions looking for arbitrage opportunities in this complex area.
2011 was a watershed year for the traded energy market. The earthquake in Japan drove the country further into the spot market to buy further LNG to replaced lost nuclear generation.
Japan’s LNG requirements allied to emerging markets, from counter-seasonal buyers in South America, the Middle East and India is likely to help to support the price differential between Asia and Hub-Index markets in Europe, at the same time, driving the market down the long road to commoditisation.