A more fluid Asian liquefied natural gas (LNG) pricing market can be expected to emerge over the next decade, according to one of the region’s prominent energy investment and fuel buying groups.
Japan-based JERA Co. Inc.’s President, Mr Yuji Kakimi, said today the global LNG sector should expect to see new buying and pricing trends emerging as the industry moved to one of greater supply volumes and greater choice in sourcing LNG.
“This would generate a gradual move away from long-term contracts to shorter and mid-term agreements, and a further rise in the current upwards trend for spot cargo purchases,” Mr Kakimi said.
Mr Kakimi’s market observations will be the central theme of his key plenary session address toLNG 18 in Perth in April – the biggest LNG conference and exhibition ever held in Australia and the world’s largest event on the 2016 global LNG calendar.
The well-respected energy executive is expected to deliver at LNG 18, a much anticipated overview of the trends in LNG spot price markets and the structural impacts that those trends will have, particularly in the Asian LNG market, a major customer region for Australia’s bevy of newly commissioned LNG projects.
“Dilemma for current LNG suppliers”
Mr Kakimi said today that while the recent ratio of spot transactions, including short-term deals, had rapidly increased, nonetheless the majority of long-term transactions were still based on a formula linked to oil prices.
“This poses a dilemma for current LNG suppliers whose returns are under pressure because of the sustained slump in oil prices,” he said.
“However, I plan to detail to LNG 18 delegates, why I think that in 10 years’ time, a specific Asian LNG pricing market will have emerged that has measureable liquidity and whose transactions within that market environment, regardless of scale or stakeholder interests, are transparent in their pricing.”
Mr Kakimi’s LNG 18 presence will also build on JERA’s release in February this year of an updated global business strategy based around expanding its LNG and other energy sector involvement in coming years in its key target markets of Asia, the Middle East and North America.
Tokyo-based JERA – owned 50% by TEPCO and 50% by Chubu Electric – is involved in new upstream energy investments, fuel procurement, thermal power plant development, energy infrastructure and fuel transportation and fuel trading.
The Company has contracted LNG volumes on its trading books presently of around 40 million tonnes per annum.
Mr Kakimi’s industry observations will be part ofan outstanding line-up of highly respected international LNG experts as plenary and concurrent speakers at LNG 18 which will be opened in April by Australian Prime Minister, The Hon Malcolm Turnbull.
Plenary session speakers include leaders from three of the largest participants in the global LNG industry – Mr Ben van Beurden (CEO, Royal Dutch Shell), Mr John Watson (CEO and Chairman of Chevron) and Woodside Ltd CEO Mr Peter Coleman – who will share centre stage when they join forces in Perth to jointly open LNG 18.
The triennial International Conference and Exhibition on LNG is owned and presented by the International Gas Union (IGU), the Gas Technology Institute (GTI) and the International Institute of Refrigeration (IIR). The host IGU member for LNG 18 is the Australian Gas Industry Trust (AGIT) with the Australian Petroleum Production and Exploration Association (APPEA) the event’s supporting association.
LNG industry professionals from more than 70 countries and hundreds of additional gas industry people will attend the 9-15 April conference for LNG 18, the prestigious triennial event that dominates LNG discussions throughout the world.
The exhibition component of LNG 18 will showcase more than 250 key companies and organisations.
The Conference Program is themed around its opening plenary topic: “The Transformation of Gas” – a theme selected to address critical topics currently posed for the global LNG industry.
INDUSTRY BACKGROUND TO LNG 18
LNG 18 is the second occasion Australia and Perth have been chosen as the venue for the world’s largest global LNG event as the city also successfully hosted LNG 12, 18 years ago.
The dramatic growth in the Australian LNG industry since LNG 12 was held in Perth in 1998 has been striking, with the nation rocketing up the output ladder towards being on the cusp of challenging Qatar by 2020 as the world’s largest LNG exporter.
From its fledgling LNG position at the time of LNG 12 in Perth, Australia is today the third largest LNG exporter in the world and with abundant offshore and onshore petroleum reserves under development and close to key LNG demand centres in the Asia-Pacific.
In the past 12 months alone, three new LNG projects on Australia’s east coast, APLNG, GLNG and QCLNG, all based around Gladstone, have come into initial production and export stages.
