International
The evolution of a liquid LNG market
Amidst the rapidly evolving global energy transition, the LNG sector is balancing the competing forces of large scale capital investment and shifting expectations from customers.
A new Deloitte paper ‘Patterns and predictions: the evolution of a liquid LNG market’, launched at the APPEA 2019 conference and exhibition in Brisbane, Australia, poses the question: will the LNG market evolve in the same way as crude oil, or will it take a different path?
Bernadette Cullinane, Deloitte Australia National Oil, Gas & Chemicals Leader, and Deloitte Global LNG Leader, said: “Huge, long-term infrastructure investment is a hallmark of the sector, and balancing this against rapidly changing commercial and contracting trends is an ongoing challenge.
“Average contract durations shortened from 20 years in 2008 to as low as seven years in 20171. However, buyer appetite for long-term contracts appears to be returning, with average contract durations lengthening to 13 years more recently, consistent with anticipated LNG supply shortfalls ahead.
“Market participants have also diversified, and new digital platforms have emerged. These trends have amplified the complexity of LNG trade which is de-linking from its crude oil heritage and displaying the hallmarks of becoming a global commodity in its own right.
“There is growing consensus that the global LNG market is becoming more liquid, but it is unclear how this transition will unfold.”