Market research firm predicts LNG market to double over 10 years

Nov. 27, 2001
Market research firm Emerging Markets Online, Houston, predicts the market for liquefied natural gas will double over the next 10 years. Change in the market is leading to uncertainty and opportunity, EMO said.

By the OGJ Online Staff

HOUSTON, Nov. 27 -- Market research firm Emerging Markets Online, Houston, predicted the market for liquefied natural gas will double over the next 10 years.

In a study called Global LNG Trade, EMO predicted that one-third of proposed market growth will come from Japan, South Korea, and Taiwan, which currently consume 67% of the world's LNG. A quarter of the growth will come from the emerging markets of India and China, and the remainder will come from growth in the European and US LNG markets, "largely to meet demand for gas-fired power generation."

In the report, EMO highlights growth trends and industry drivers, including increased competition in LNG trade, an ever-rising demand for natural gas, falling costs of LNG supply and shipping, and rising demand from Europe and the US for gas-fired power plants.

EMO said, "LNG trade liberalization in existing markets is leading to uncertainty and opportunity."

The report foresees new competition for LNG shipping transforming the supply and cost structure of LNG deals. "Traditional LNG trade, with LNG supplied on a continuous basis by dedicated ships between one seller and one buyer, has sometimes been called a 'floating pipeline.'"

However, said the research group, LNG transportation is inherently more flexible than pipeline transport. "Short-term LNG sales contracts are continuing to grow in number, but long-term contracts are expected to remain the backbone of LNG trade. However, the way such contracts are established is changing. LNG supply and shipping contracts now allow more flexibility to meet the challenges of the marketplace."

The report finds "The 'winners' in the future LNG industry will be those taking a long-term view, who cooperate with other participants in the LNG chain, those willing to innovate and take risk in adapting to the changing situation."