Global LNG market: supply-demand and economic analysis

Abstract

The transition to clean and low-carbon energy is an irresistible trend globally that drives the scale of trade in the global LNG market to grow continuously. The paper reviews the global LNG trade in 2020 and forecasts the future LNG supply and demand. On this basis, the costs in segments of a LNG project are analysed from the perspective of the LNG industry chain. The feasibility of export from LNG projects and the preferred target markets are determined by calculating the economic index of projects. It is concluded that the possibility of future rebound in oil prices and the demand growth in the incremental market in emerging Asian countries are most likely to determine the capacity scales of new LNG projects around the world and contribute to a dynamic balance in the LNG market in the medium- and longterm. The costs in different segments of the LNG industry chain vary greatly with the availability of resources and markets. The economics of LNG export depend on the demand for LNG imports in end markets, the cost plus in different segments of the industrial chain, and the affordability of end consumers. Through the cost and economic analysis on typical LNG Projects, Qatar is found still the most economical and highly profitable country in the global LNG export market nowadays. Unsatisfactory economic performance is a common reason for delayed investments in many large LNG projects in Australia and other countries.

Global Gas and LNG Markets: Demand, Supply Dynamics, and Implications for the Future

“…Global LNG trade will have more than doubled to USD 450 billion by 2022, with traded volumes increasing by 6%. On the other hand, the modest 5.5% increase in supply was due to maintenance at large liquefaction ports and a long outage at Freeport in the United States [20]. According to the IEEFA, global LNG prices will remain structurally high for several years due to weak supply growth and strong demand.…”

“…In 2022, Europe boosted its LNG imports by 60% to more than 100 million tons, offsetting the decline in Russian pipeline gas shipments caused by the Ukraine crisis. This increase in LNG imports allowed Europe to maintain its energy security and meet its energy needs, despite the supply disruptions caused by the crisis [20].…”

“…The ability to redirect LNG shipments to different needs in response to changing demand has allowed the industry to respond quickly to supply disruptions and maintain energy security. With LNG expected to become a core energy supply for Europe in the coming years, the flexibility of the LNG industry will be increasingly important for meeting the region's energy needs [20].…”

“…This competition for limited new supply is expected to maintain high prices and create opportunities for LNG traders and exporters to capture value. To navigate the highly competitive and dynamic global gas and LNG markets, industry stakeholders must develop robust strategies that address the challenges of oversupply, market volatility, and changing demand patterns [20].…”

A Prediction Model for Spot LNG Prices Based on Machine Learning Algorithms to Reduce Fluctuation Risks in Purchasing Prices

“…The collection period for extracting the raw data was set to 12 years, from 2010 to 2021. As of 2021, approximately 63% of LNG transactions worldwide have been in the form of LTFCs [46]. Owing to the nature of this contract type, signing an LTFC at a fixed price exposes both the buyer and seller to excessive risk.…”