Global Gas Trade Research Articles

Stages of development of LNG production and sales

In 1895 Carl von Linde developed the technology for liquefying natural gas, but only in the early twentieth century commercial production of liquefied natural gas was begun. Liquefied natural gas (LNG) is natural gas, primarily methane, that has been artificially liquefi ed by cooling to minus 160 °C for easy storage or transportation. It is a liquid that is colorless and odorless. Pure LNG is not fl ammable, does not ignite or explode on its own. There are several stages of development of LNG production and sales. The fi rst stage (1917–1941) — the first LNG plant was built in the USA. In 1917, an LNG plant was built in the US. The second stage (1959–1969) was the beginning of LNG exports from the US to Europe. The third stage (1969–2020) was the development of the world LNG market. As of early 2010, there were more than 30 large-capacity plants in the world aimed at LNG exports. The fourth stage (2020-present) is the impact of the coronavirus on the world LNG market. Since 2010, global LNG exports have increased from 302.4 billion cubic meters to 487.9 billion cubic meters in 2020. LNG already accounts for more than 40 percent of global gas trade. Leading LNG exporters include Qatar, Australia, the USA, Russia, Malaysia, Nigeria, Trinidad and Tobago, Algeria and Indonesia. Russia accounts for 8 % of global LNG exports. The pandemic situation in the world has caused oil prices to fall and remain low, so suppliers with low costs or high margins are in an advantageous position. Nevertheless, several LNG projects are planned to be launched in the near future, which will allow Russia to become one of the leaders in LNG production. The article outlines the stages of development of LNG production and sales, analyzes the current state of global LNG production, and also lists various LNG projects in Russia.

The impact of demand uncertainties and China-US natural gas tariff on global gas trade

Abstract The uncertainties in gas demand levels and geopolitical issues may lead to significant changes in global gas trade. This paper uses an agent-based model to simulate the alternative market futures under two demand trajectories: a baseline following current policy pledges until 2060 and another where demand shifts to a lower level in 2030. Endogenously generated capacity investments are driven by long-term bilateral contracts between importers and exporters, where investors are assumed to evaluate the potential risks of demand changes while making their decisions. The results suggest that, when the demand decreases in 2030, the Middle East takes the dominant position in Eastern Asia, whereas this role is occupied by North America in the current policy scenario. In addition, the impacts of a 25% tariff by China on U.S. natural gas are studied for both scenarios. The revenue of North American gas trade is only marginally affected by this tariff. Under the normal demand trajectory, the tariff influences the Chinese market more notably in the longer term when global supply is tightened by decommissioning. In the case of lower global gas demand, the market share of Russia in Western Europe could be threatened by increasing North American export there.

Simulating the game-theoretic market equilibrium and contract-driven investment in global gas trade using an agent-based method

To understand how the alternative US liquefied natural gas exportation strategies may affect future global gas market dynamics, a global-scale model Gas-GAME is developed using an agent-based framework. This is the first model having explicit contract-driven capacity expansion process, allowing investors to hold imperfect foresights, and simulating market power in global gas trade. With these features, Gas-GAME can analyse market development subject to the incentives and perspectives of each market player. The model simulates short-term game-theoretical market equilibrium with Mixed Complementarity Problem approach. For long-term investment decisions, bilateral contracting processes considering both import requests and export profitability are modelled. A base case is presented and validated, followed by a case study considering US export strategy. When the US stays conservative in export expansion, gas supply tightness occurs, leading to continuing European dependence on Russian gas, and a shift to pipeline-based import in the Chinese market. Conversely, when the US invests aggressively, Middle East and Australia both see significant revenue losses, and Western Europe constructs more regasification plants to provide alternatives to Russian supply. Gas-GAME captures the essential dynamics between market power, short-term prices and long-term contracts to provide a more nuanced view of global gas market.

Structural risk evaluation of global gas trade by a network-based dynamics simulation model

The uneven distribution of natural gas in the world makes the gas trade between countries close, and the importance of natural gas for national economies leads to a high dependence of gas-importing countries on external natural gas resources. This dependency creates a potential structural risk in the global gas trade that can spread out along trade linkages when parts of the gas trade collapse. In this paper, we developed a simulation model for the diffusion of gas trade ruptures based on a modified bootstrap percolation network model. We used this model to detect the potential gas trade risk and observed the roles of gas trade participants in the risk transmission process. In the results, we found that Norway and Qatar have the greatest impact on price fluctuations in the risk simulation. While Russia's influence ranks lower in the global gas market, although it has larger trade partners. Meanwhile, the external gas supply risk for gas-importing countries varies greatly and shows regional characteristics (European countries are in a higher trade risk environment, while China and Japan have the largest gas supply risk in Asia). We also identified the diffusion paths of gas supply breaks and found that Singapore and India are likely to serve as the largest intermediaries, causing a wide range of trade collapse.

Global LNG trade: A comprehensive up to date analysis

The importance of the liquefied-natural-gas (LNG) in global gas trade has grown steadily over the past decades; the article focuses on this significant form of energy and provides an exhaustive portrait of its trade. LNG trade flows both regionally and by country are described and the future of trade is forecast. Next, the business structure is discussed. The traditional LNG trade on long-term contracts (LTCs) is considered and it is explained how vital these contracts are in distributing the volume and price risks in the industry, furthermore, in securing finance for the LNG projects. The essence of gas market liberalization and its effect on LTCs is considered and it is shown that in liberalized gas markets, risk has migrated to upstream. In the light of this risk redistribution, the suppliers’ intent in moving toward vertical integration of the industry is discussed. Later, various types of LNG spot sale in arbitrage, and for uncommitted product to LTCs, are considered and the biggest spot sale markets are identified. Finally, pricing of LNG for different markets in both LTCs and spot sales is discussed and it is forecast that due to the surge of supply, rather than any change in oil prices, LNG prices are anticipated to decrease globally at least for the next 5 years.

The influence of the Panama Canal on global gas trade

An increasing growth of unconventional gas production in the U.S. has gradually turned it into a potential gas exporter. In near future, increasing LNG exports from the U.S. coupled with the capacity of the Panama Canal will change the LNG market. The Panama Canal expansion is the key to the change because the route via this canal reduces the voyage by 7000 nautical miles to Japan from the Gulf of Mexico. Applying the World Gas Model from the University of Maryland, this paper investigates the potential effects of varying Panama Canal tolls on the LNG markets via six scenarios of possible Panama Canal tariffs. Results are compared and examined with the focus on prices, LNG flows, and supply displacement. We find a significant LNG volume tradeoff between Asian and European gas markets. The U.S. and Trinidad & Tobago are key players due to their LNG exports displacing to some extent, flows from the Middle East, Africa, and other Asian suppliers to the Japanese and South Korean markets. Japanese & South Korean prices are significantly reduced when the Panama Canal tariff is low due to more supplies from the Atlantic Basin. As the toll increases, the U.S. and Trinidad &Tobago switch their exports to Europe rather than these markets in East Asia. European prices are improved when that region gets more LNG from the Atlantic basin.

The future of natural gas consumption in Beijing, Guangdong and Shanghai: An assessment utilizing MARKAL

Natural gas could possibly become a si0gnificant portion of the future fuel mix in China. However, there is still great uncertainty surrounding the size of this potential market and therefore its impact on the global gas trade. In order to identify some of the important factors that might drive natural gas consumption in key demand areas in China, we focus on three regions: Beijing, Guangdong, and Shanghai. Using the economic optimization model MARKAL, we initially assume that the drivers are government mandates of emissions standards, reform of the Chinese financial structure, the price and available supply of natural gas, and the rate of penetration of advanced power generating and end-use. The results from the model show that the level of natural gas consumption is most sensitive to policy scenarios, which strictly limit SO 2 emissions from power plants. The model also revealed that the low cost of capital for power plants in China boosts the economic viability of capital-intensive coal-fired plants. This suggests that reform within the financial sector could be a lever for encouraging increased natural gas use.