The Asian Quest for LNG in a Globalising Market Executive Director, IEA

The Asian Quest for LNG in a
Globalising Market
Maria van der Hoeven
Executive Director, IEA
7 November, 2014
OECD/IEA 2013
©©OECD/IEA
2014
Strong Asian demand will support
global LNG trade
500
450
OECD Europe
30%
350
25%
OECD Asia
Oceania
OECD Americas
300
20%
Middle East
200
15%
Latin America
150
10%
China
5%
Non-OECD Asia
0%
China + nonOECD Asia
400
Bcm
35%
250
100
50
0
2013
2014
2015
2016
2017
2018
2019
 Global LNG trade is set to expand by one-third to 450bcm by 2019,
and likely to increase further.
 Increase of global LNG trade will be supported by Asia,
mostly by strong demand from China and non-OECD Asia.
© OECD/IEA 2014
What is making the Asian gas
price so high?
20
18
Henry hub
16
USD/MBtu
14
12
NBP
10
8
6
Asian LNG
(average)
4
2
0
German border
price
 Wide price gap exists among major regional gas markets for several years.
 Not only is it the fastest-growing gas market, Asia is even more attractive
for producers because Asian buyers pay the highest prices.
 Less tight LNG spot market once new LNG projects start in the near future.
© OECD/IEA 2014
Trading hubs – An Asian-tailored
solution?
TAGP and LNG terminals in Southeast Asia
 Southeast Asian countries are already interlinked by pipeline and plan to
increase these linkages through Trans ASEAN Gas Pipeline (TAGP) and LNG.
© OECD/IEA 2014
Henry Hub indexation in new
contracts is not the only solution
Relevance
Asian hub indexation
HH indexation
Oil indexation
Time
 US Henry Hub reached as high as USD 8/Mbtu in early 2014, whereas
Asian spot prices went down to below USD 11/Mbtu during this summer.
 Longer term, a mix of oil, Henry Hub and Asian hub indexation could
govern LNG contracts.
© OECD/IEA 2014
Asian countries are looking
for more competitive markets
China
 Unbundling and price reform are under
way to tackle the issues related to a
larger import dependency.
India
 There have been further attempts to
change the pricing regime, although
reform has not yet been undertaken.
Japan
 Electricity system reform progressing as
well as discussion of gas system reform
 Already launched new platform for LNG
futures transaction
Korea
 State-controlled KOGAS efforting to
reduce LNG import prices by teaming
up with private companies as well as
Japanese utility.
Singapore
 Already a liberalised market with LNG
trading hub established, and waiting
for its business expansion.
 Many Asian countries are undertaking their own market reforms
to enhance market efficiency as well as market competition.
© OECD/IEA 2014
OECD/IEA 2013
©©OECD/IEA
2014
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