Market Trends
Global LNG Trade
In the last 50 years, LNG trade has grown on average at 11% per year, from 2.6 MT in 1971 to 356.1 MT in 2020. The growth was steadily positive (except 1980-81 and 2012) with 40% of the time double-digit growth rates.
The cumulated number of LNG deliveries exceeded 110 000 in 2020.
In 2020, LNG has been delivered to 43 different markets around the world. The number of LNG importing markets has been multiplied by almost 5 since the 1990s with the most significant additions in the 2009-2016 period.
There is a growing need for market flexibility, which has led the share of spot and short-term LNG trade to increase from 5% in 2000 to 40% in 2020.
LNG Infrastructure
Global liquefaction capacity stands at 456.6 MT.
During the last 30 years the number of exporting countries has more than doubled, leading to an increased diversification of supply sources.
While liquefaction capacity has grown steadily over the years, the last 5 years (2015-2020) were marked by an acceleration of the liquefaction capacity growth. This was primarily due to the rise of the USA as an LNG exporter, and expansions in Australia and Russia.
The completion of the 1st wave of US LNG projects has set an end to the expansionary cycle and the market is now observing a slowdown in the additions of liquefaction capacity.
Global regasification capacity stands at 974 MT, of which 136 MT is floating-based, i.e around 14% of total regasification capacity.
While regasification capacity gas been growing steadily, the highest growth rates in regasification capacity were observed during the decade 2000-2010, during which capacity grew at 9% per year on average, followed by the 2010-2020 decade at 5% per year.
While regasification capacity continues to be built, the majority of which in Asia and Latin America, the growth rate has recently slowed down.
Source of LNG Imports
Asia is the leading importing region. The largest Asian LNG importers are China, Japan, South Korea, India and Taiwan. In 2020, Asia imported 254.4 MT, accounting for 71% of global LNG imports.
The Asian continent is currently driving demand growth, notably led by growth of LNG imports into China, which has overtaken Japan as the largest LNG importer.
In 2020, Europe imported 81.6 MT of LNG. The main importing countries in 2020 where Spain, the United Kingdom and France. Europe is a residual market for LNG and has acted during the past years as a balancing market, showing since 2019 an increase in its LNG imports. LNG imports into Europe are usually triggered by price differentials between Asia and European markets.
In 2020, America, driven by Chile, Brazil, Mexico and Argentina imported 13.2 MT, and the Middle East and Africa imported a combined 6.9 MT.
In 2020 the Pacific Basin accounted for 146.2 MT with 41% of global LNG supply, the Atlantic Basin 117.4 MT and the Middle East 92.6 MT.
While the Pacific Basin remains the largest source of LNG supplies, the Atlantic Basin is the only region which experienced growth in 2020, thus narrowing the gap between both basins. After years of expansion of Pacific supply (since 2016), suppliers from the Atlantic basin are strengthening their share with US and Russian LNG.
LNG Routes
Additional supply from the Atlantic Basin has led to the emergence of new trading patterns:
- Balancing between Europe and Asia is provided by swing LNG suppliers (such as Qatar and the USA).
- While Yamal LNG volumes are mostly destined for Europe, flexible US LNG volumes get delivered to either Europe or Asia depending on market conditions.
- Australian supply underpins Asian growth.
Contracts
Long-term contracts represent the greatest share of contracts signed, but their time duration has been reduced over time. The average length of contracts is cyclical, meaning longer term contracts are signed for new projects to guarantee project economics, while expiring contacts are replaced by shorter ones.
2021 outperformed 2020 in terms of volumes of signed contracts.
- An increasing number of 10-year contracts is observed, pushed by trading companies and portfolio players.
- Pricing formulae of recently signed contracts are linked to a variety of indices: oil, JKM, TTF, AECO, mixed.
- Portfolio players and trading companies play a growing role in new contracts.
