Tomorrow’s LNG – the view from the podium at Gastech
Eighteen months ago in Singapore, the mood at Gastech was one of quiet pessimism. The autumn 2015 event took place after a flurry of floating LNG project cancellations and amid early signs of a slowdown in LNG-export project final investment decisions and orders for new tonnage.
The mood at this year’s Gastech is altogether more buoyant – despite the pessimism that surrounds our industry. LNG shipowners, equipment manufacturers and solutions suppliers have a new focus, on unlocking new, smaller import markets. The race is on to develop ways to fulfil smaller, shorter-term contracts to remote buyer markets.
And what of the bigger picture? Here are some thoughts from the podium from this year’s conference.
Gastech 2017 consortium chairman Nobuo Tanaka
“The new US America-first policy is a matter of concern to all of us, given that the US is the sole winner in the changing LNG market. Although Japan continues to play a leading role, the prospects are uncertain and will be shaped by the government and by the market. The shape and direction of Japan’s gas and power market reforms is also unpredictable. The goal of Gastech is to reduce that unpredictability.”
JERA president Yuji Kakimi
“As the trends indicate that LNG demand will outgrow shipping in the mid to long-term, there is every prospect of a price hike. But the bad news is linked to Asia’s growing power-generation requirement. Coal is still a fuel of choice because it is cheaper than LNG. Renewables will also be more competitive than LNG. Japanese deregulation and the inadequate liquidity of LNG remain a challenge.”
Jordan Cove president and chief executive Elizabeth Spomer
“The new US administration wants to move private money off the sidelines into infrastructure. This new government is going to eliminate Obama-era restrictions. President Trump clearly intends to reverse the policies that have impeded energy and infrastructure development.”
Total chairman and chief executive Patrick Pouyanné
“We are facing global overcapacity that is putting pressure on prices. The industry is entering a period of reduced investments [that] could result in a lack of supply in five years. We must carry on investing for the future.”
Trafigura head of LNG Hadi Hallouche
“LNG, unlike other commodities, currently lacks standard terms and conditions which has created inefficiencies, a lack of transparency and barriers to new entrants that would help increase liquidity in the industry. So we’ve proposed what we hope will be viewed as a strong starting point… I’m confident that we can move towards creating an industry standard master sales and purchase agreement.”
Tellurian Investments founder and chairman Charif Souki
“US$3 per mmBtu is the new benchmark price for natural gas. We are planning to offer cargoes from Driftwood LNG at US$8 per mmBtu for an initial 7 million tonnes a year, for contracts of up to eight years from 2023. This is our new business model.”