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Asian LNG patrons are navigating a near-term market that’s so finely balanced that any provide disruptions or demand upsides may trigger vital value volatility in response to Mangesh Dilip Patankar, Vice President, APAC Fuel and LNG Consulting at Wooden Mackenzie.
Talking on the sidelines of the Gastech 2023 convention being held in Singapore, Patankar stated that the LNG market is at a vital juncture and the unsure outlook has affected pricing and contract phrases considerably and widened the hole between purchaser and vendor aspirations.
“Many LNG patrons face the problem of making certain LNG provide safety, whereas preserving their procurement prices aggressive and contractual phrases versatile,” Patankar commented. “Concurrently, the phrases in LNG sale and buy agreements (SPAs) are additionally evolving as LNG buying and selling will increase.”
In line with Wooden Mackenzie Lens, Australia and Qatar might be greatest suppliers of LNG to Asia all through 2023 – 2030 with volumes of over 886 t and 827 t respectively. This can account for nearly 60% of the entire volumes of LNG delivered into Asia throughout this era.
Patankar believes that the LNG market cooling off from final 12 months’s highs means rising patrons, notably in Asia, are actually eager to reengage sellers. Nevertheless, he warns that any Asian patrons seeking to re-enter the market should perceive LNG’s complicated fundamentals and observe its value volatility.
“As [LNG] patrons ponder their choices, it turns into essential for them to judge the combo of pricing indices of their portfolio resembling oil or Henry Hub and whether or not they need to additionally take some publicity to identify pricing/spot pur-chases,” Patanker stated.
Patankar added that with the brand new wave of LNG tasks not anticipated to make a big impression by way of elevated provide till 2026, the market seems to be set to stay tight. Wooden Mackenzie LENS information exhibits LNG year- on-year provide development averaging 40 million tpy yearly from 2026-2028, serving to the worldwide market to rebalance, which is predicted to carry costs down.
Patankar believes this may enhance fuel affordability, facilitate LNG availability for Europe and allow a rebound of demand in Asia.
“The outlook for LNG market past 2028 is then depending on the extent of liquefaction challenge ultimate funding choices (FIDs) throughout the subsequent 1-2 years in addition to the tempo of vitality transition, along with a number of dynamic supply-demand associated elements.”
Learn the article on-line at: https://www.lngindustry.com/liquid-natural-gas/06092023/wood-mackenzie-asian-lng-buyers-face-volatile-market-until-2026/
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