Qatar is the largest exporter of liquefied natural gas, so it is appropriate to be a global reference point for the pricing of LNG in Asia, and the establishment of an energy exchange in Qatar to trade gas will increase revenues.
Natural gas hubs tend to be at the heart of gas infrastructure networks such as pipelines and liquefied natural gas (LNG) terminals. The hub is used as a central pricing point for the network’s natural gas, and in some cases, the financial derivative contract of the gas that is delivered at a point is also priced, for example, liquefied petroleum gas (LPG), petroleum condensate (condensates), Naphtha and others.
A strong consumer base, with competing buying interests — for example, residential, energy and industrial consumers — is also seen as essential for developing the LNG market, as well as for the growth of major gas producers in Asia.
Regulations that allow domestic and foreign participants to trade and access pipelines, storage facilities, gas tankers and production lines are also seen as essential to establishing a ‘gas centre’ and exchange. The increased supply of gas is also seen as necessary in the early stages of developing a market to allow the commodity to be traded in large quantities.
For example, it represents gas delivered at a particular point on a US natural gas futures contract, which is the largest market for gas derivatives in the world — and is also used in pricing US LNG exports. It is called the ‘Henry Hub’. From extensive domestic production and consumption in the US, in addition to having the world’s largest and most easily accessible pipeline network stretching to Canada and Mexico.
In Europe, the British National Balance Point (NBP) and the Dutch Transfer Facility (TTF) have emerged as major gas centres.
NBP was the first active gas trading centre in Europe, like its larger counterpart in the US, as it benefited from open market regulation, large domestic production — in the North Sea — and high consumption. Britain also takes pipeline gas from Norway and imports liquefied natural gas.
In Asia, there are no gas trading centres that will become the price benchmark in Asia.
Japan, the world’s largest importer of LNG, is trying to make deliveries to its shores as a benchmark for LNG pricing in Asia. However, its lack of GDP and the declining demand trend due to declining population and competition from other fuels are seen as a stumbling block.
Singapore wants to replicate for the LNG market what it has done in the field of oil by becoming the benchmark for fuel prices in Asia. But while market-friendly regulations are seen as favourable, their small population and lack of storage capacity are obstacles. Hence, Japan, China or Singapore need a source of gas production with transparency in pricing and supply.
New demand for LNG from marine transportation is expected to increase, for the use in tankers instead of fuel oil, thanks to the new emission regulations of the International Maritime Organisation; and from road transport — as the public transport shifts from oil-derived fuel to compressed LNG and in production of electricity, at a rate of 12% annually.
Asia will become the largest engine of growth for gas demand and importers of liquefied natural gas in the world. Asia imports 340bn cubic metres of LNG, and these imports are set to double by 2040 and it is definitely a good news for LNG exporters. Developing Asia’s markets have enormous potential, but the LNG trade will grow gradually and at a slow pace as many countries in Asia, especially developing countries, lack in infrastructure, and affordability is a challenge as imported gas must compete with domestic coal.
India is an example. Gas has a market share of only 6%, well below the government’s target of 15%, and is struggling to compete with coal and the rapid spread of renewables.
Therefore, there are challenges to gas demand growth in all major markets that will challenge producers and gradually increase the pressure on gas demand over years and even decades. The global demand for gas is increasing and growing. It is natural for gas to be a reliable and environmentally friendly source of energy, and the price of gas is very competitive compared to oil and coal.
Therefore, establishing a global market for pricing and trading in natural gas in Qatar is a subject that deserves technical and financial study, in coordination with consumers in China, Japan, South Korea and others — especially since Qatar has the infrastructure, a fleet of tankers and pipelines, and it is considered one of the largest LNG producers in the world.
* Saad Abdulla al-Kuwari graduated in Chemical Engineering from Qatar
University and obtained an MBA in Oil & Gas from Liverpool University. He was
appointed CEO of Tasweeq in 2010. During his career, he has occupied several key positions in refining projects and processing, oil, gas and refined products, storage tanks and export terminals operation. He also has considerable experience in the field of Gas Processing Operations. He was also manager of Gas, Oil Petrochemical Marketing in QP
Marketing Directorate for several years.
from Gulf Times https://ift.tt/2FfHeTH
Comments
Post a Comment