Gas will be the energy of the 21st century. Demand is forecast to grow 2.5% a year for the next 10 years, ranking it second in the global energy mix in 2030.
What will be future of LNG supply contracts? Will spot-priced short term contracts prevail over oil-linked ones? How much pressure will the LNG trade put on oil indexation in Asia? The answers will depend on the future of the nuclear generation in Asia and on the status of the new LNG projects in different parts of the world the International Gas Union (IGU) has issued World LNG Report 2013 to answer above questions. The report reviews the situation of the global LNG market throughout 2012, up to the first quarter of 2013.
”The role and place of gas on the global energy arena has been strengthened in past decades. Gas, the cleanest fossil fuel and the only one expected to grow, is being recognized as the key fuel for meeting the challenge of rising energy demands. The LNG sector follows this upwards trend as the main driver of globalization of the gas industry. In 20 years, the LNG trade has evolved from an intra-regional status to achieve worldwide growth at a 10% rate a year. It is expected to continue to grow, albeit at a slower pace, driven by new technology developments and an extreme elasticity of the market. While reaching its 50th anniversary (2014), the LNG business will remain the most dynamic player on the global gas scene. In 2012, LNG trade slightly decreased following a downturn trend in European gas consumption. The shale gas revolution reduced the need for LNG imports in North America, while Asian market remained tight with LNG playing a key role as a substitute for nuclear power.” Mr Jerome Ferrer, Chairman of the International Gas Union comments.
State of the LNG Industry
Shipping Fleet
At the end of 2012, the global LNG fleet consisted of 362 vessels of all types, with a combined capacity of 54 bcm (vessels below 18,000 cm are not counted in the global fleet for the purposes of this report). This is more than one and a half times the size of the fleet at the end of 2006. The fleet grew by two vessels in 2012: one was delivered for use at Malaysia LNG and the other for Angola LNG. The order book for new vessels stood at 96, equivalent to 16 mmcm of new capacity. By end-2012, spot rates for modern tonnage moderated to the level of US$120,000/day after growing to US$78,000/day in 2011.
LNG as Transport Fuel
LNG use as a transportation fuel is marginal at this time. However, the divergence of natural gas and oil prices has created an opportunity for increased use. Forthcoming changes to emission standards in the global shipping industry will also boost LNG’s potential in the bunker fuel market. Even with these drivers, commitment of infrastructure investment may dictate LNG’s penetration rate in the transport sector.
More information may be found at the World LNG Report – 2013 Edition
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