The global liquefied natural gas (LNG) market continues to grow and evolve, and it will be taking at least a portion of the North American natural gas market right along with it. According to one LNG industry veteran, there hasn't been a time in the last 20 years that the business was changing faster than it is today.
Last year saw 158 million tonnes of LNG exported around the world as well as the addition of five new importing countries and two new exporting countries, said Fred Adamchak, Poten & Partners Inc. senior LNG advisor. He told attendees at Platts 6th Annual Liquefied Natural Gas conference in Houston Monday to expect more and faster growth over the next nine years.
Adamchak said Poten projects a compound annual growth rate (CAGR) of 14% in the Atlantic Basin between now and 2015. The United States dominates the Atlantic Basin, accounting for more than half of demand growth. The United Kingdom is the other major player in the basin, where the market is expected to grow to 83 million tonnes by 2015, Adamchak said.
Growth is somewhat less robust in the more mature Pacific Basin. There Poten projects a CAGR of 7% to 2015. In the Pacific the major importers are Japan, Korea and Taiwan with India an emerging market for LNG.
Combined, the Atlantic and Pacific basins will offer a 9% CAGR over the next 9 years. Adamchak said that demand in the Atlantic and Pacific basins will be about equal by 2015. And although they were once thought to be discrete markets, it is becoming apparent that there is the potential for more integration of the Atlantic and Pacific markets than once thought.
Also, while LNG emanating from the Middle East is looking westward for more rapidly growing markets, LNG from Qatar, once thought to be earmarked for North America, is finding a home in Asian markets under long-term contracts.
After 2010, demand is projected to exceed supply in the Atlantic Basin, and in the Pacific Basin more supply commitments will be needed from countries such as Australia, Russia and Iran to meet demand.
As the overall market grows and evolves, the spot market is taking a larger share, Adamchak said. Spot trades have been growing at six times the rate of term LNG, he said. In 2000 the spot market accounted for about 5% of the overall market. Last year it made up about 15% of the overall market. While Europe and Asia saw the delivery of more spot cargoes last year, spot deliveries to the United States declined, he noted. The Middle East is a growing spot market exporter, but the Atlantic Basin is the largest source of spot cargoes.
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