IEA mentions the risk of insufficient LNG investment and shipping capacity
October 22, 2018
IEA mentioned in its third annual edition of the Global Gas Security Review that global natural gas markets are being reshaped by the development of major emerging LNG buyers led by China, and the rising production and exports from the United States.
The analysis finds that, while there have been real improvements in LNG flexibility that can contribute to easing supply shortages, uncertainties remain for the future evolution of gas markets. This includes a risk of tightening from insufficient investment in production and infrastructure capacity, or questions surrounding future shipping capacity growth, a pre-condition for LNG market flexibility. These uncertainties could have an impact on price volatility and hurt consumers – especially the most price-sensitive emerging buyers – and cause additional security concerns.
The report also addresses how LNG markets are reshaping shipping needs. The risk of a lack of timely investment in the LNG carrier fleet could pose a threat to market development and security of supply, which could materialize even earlier than the risk of insufficient liquefaction capacity. To address these issues, supply flexibility remains a key prerequisite to ensure further global gas trade development and security. Yet the priorities in terms of flexibility differ for long-term traditional buyers who seek the removal of destination clauses, and new emerging buyers whose priority is more focused on procuring short-term supply, usually for prompt execution.
Edited from IEA press release.