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Cancellation of gas supplies to Japan leads to structural changes in the global LNG market - EastRussia | Far East

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The abolition of gas supplies to Japan leads to structural changes in the global LNG market

The liquefied natural gas (LNG) market changed in 2011, when Japan eventually shut down all its nuclear reactors after the Fukushima tragedy. To compensate for the shortage of energy produced, Japan increased the consumption of liquefied natural gas, thereby raising the price of LNG in the Asia-Pacific region to an unprecedented level

The abolition of gas supplies to Japan leads to structural changes in the global LNG market
Over the next few years, the LNG market could be characterized as a period of limited supply, but extremely high prices, surpassing all possible basic principles of supply-demand theory. As a result, the leading importer of LNG is Japan, as well as the second importer in the series - South Korea, then India and other countries tried to lower prices using a variety of schemes, but all attempts were unsuccessful, writes Forbes.

However, what the largest PSG importers could not achieve, made overproduction for them, which led to a significant drop in prices for this type of fuel. Global LNG production reached a volume of one million metric tons per year in 250 and, according to analysts' forecasts, by the year 2018, LNG production will be about 330 million metric tons per year. In February, 2014 of the year, the spot price for LNG in Asia broke through the mark in 20 dollars per million British thermal units (MBTE); However, in February of this year, prices fell to the level of 5 dollars per MBTE, and according to some analysts' forecasts, the fall will continue to the 4 dollar mark next year.

According to Forbes, the tendency to oversupply in PSG supplies, which leads to a glut in the market, is likely to continue in the coming decade. Therefore, on Thursday, January 28, there was news that Japanese PSG buyers would now sell excess LNG reserves. Reuters announced that after decades of negotiations with LNG suppliers about the maximum possible price reduction, the leading LNG importers, in search of an opportunity to sell excess LNG, have turned consumers into competitors in this market. The report says that Japan is unlikely to get rid of large volumes of LNG, but now the country is trying to postpone or cancel some supplies, having previously overestimated its gas needs, thereby adding to market tensions already faced with global oversaturation.

Nevertheless, the news that Japan is trying to get rid of surplus gas is in itself an achievement, as it signals that the LNG market is beginning a process of structural changes, albeit not fundamental yet.

With the introduction of more and more gas from Australia into the LNG market, which plans to put into operation 10 LNG projects in 2017 with a total capacity of 85 million tons (more than one-third of the current global demand for LNG), in addition to Qatar, the current leader in gas production , Whose liquefaction capacity is 75 million tons per year, and also adding at least five other projects in the US that are at different stages of construction, the surplus of LNG on the background of a decrease in demand forces gas buyers to become sellers Am.

There will be two segments in the LNG market: the spot transactions segment and short-term trading, to the great pleasure of Singapore, whose goal is to become a regional trading center for LNG trading in Asia. In addition, LNG producers, which in the past did not lack demand, will now actively seek out the markets for their products, believes Forbes.

Structural changes in the LNG market have already begun, and news similar to those that refer to the cancellation of some gas supplies to Japan will no longer cause surprise, as it is now buyers who determine the situation in the gas market, to the great displeasure of the producers, who for a long time Time dictated their terms.