LNG Demand and Supply Gap Likely to Increase, says Shell


The global liquefied natural gas (LNG) market has been growing extensively on account of the consistent demand from various end users. In fact, it is anticipated that by mid-2020, there will be a shortage of LNG supply unless new LNG production projects are started soon. According to a report published by Shell’s LNG Outlook, Japan had been leading in terms of the largest LNG importer in 2017 followed by China and South Korea.

This is a significant demand from importers in Asia as well as in Europe. Also, as LNG offers flexible, clean, and reliable energy supply, other countries in the world are also expected import it. LNG has been playing an important role in the global energy system in the last few decades and since 2000 the number of nations importing LNG has quadrupled. Also, the number of supplying countries that is exporting to other countries have doubled. LNG trade has reached 300 million tons last year and this amount is enough to generate gas or power for 575 million homes.

One of the key trends seen among LNG buyers is the fact that they sign shorter and smaller contract. This trend is anticipated to continue. However there is a mismatch in the requirements of suppliers and buyers. LNG buyers want shorter, smaller and flexible contracts, while suppliers want long-term contracts. This is because LNG buyers wish to compete in their own downstream power and gas markets thereby wanting flexible and shorter contracts whereas the need for securing finances has resulted in suppliers wanting long-term LNG sales and contracts. In order to enable LNG project developers to make final investment decisions so as to ensure that there is enough supply of LNG for the world in the future, this mismatch between buyers and suppliers requirement needs to be resolved.

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