Gas producers and consumers came together in Beijing last week for the bi-annual GASEX conference. GASEX is a conference every other year put together by the gas industry associations in Asia.
The one headline I take away from the conference is that the buyers are moving fast to take advantage of the low LNG prices and support the development of new markets and new applications. Gone are the days where the buyers were mainly focused on accessing supply and negotiating long-term contracts. In today’s oversupplied market, buyers are:
Finding ways to bring LNG into new markets—for example PetroVietnam's ambition to develop the LNG market in Vietnam (from no LNG today) and how they are leveraging the experience of Tokyo Gas
Moving into new applications and developing new customers—for example Shenzhen Gas is investing in a terminal and seeking business opportunities in the LNG trucking market, so an investment they were exploring just 2 years ago is now a reality
Competing to be the Asia "LNG hub." The Energy Institute of Singapore and other from Singapore made a strong case for Singapore to be the Asia "LNG hub," but there was acknowledgement that competition from South Korea, Japan, and particularly China with its diverse natural gas supply (domestic, pipeline import, LNG) and large captive demand (i.e., Shanghai, and other coastal cities in China)
Investigating "virtual pipeline" solutions as an alternative to building pipeline infrastructure- for example Myanmar
Ensuring that they have diversity in natural gas supply- e.g., Chinese buyers showed charts on diversity in China's sources (pipeline, domestic production, and LNG) and diversity in the countries that supply LNG to China
Leveraging digital to transform their operating model evidenced by many presentations on IoT coupled with innovations in metrology, gas heat pumps, and leak survey technology
For the buyers of LNG, there are more options and more opportunity, but also more complexity. There were many questions on risk management and contract portfolios as well as an increased emphasis on midstream assets (shipping, pipelines, storage) and how to access financing. Also, large and small players may be on their way to pooling demand (or at least know-how).
For the producers and marketers of LNG, what’s probably most important is understanding how the buyers (and potential new customers) are changing and how to be part of this journey.
Read more about transformation of the supply and demand equation and opportunities for LNG producers and marketers in Gas Grows Up.
Reflections from IP week: Shaping the gas landscape
To expand global LNG demand, think small
Russian gas comes out fighting with strong support from the industry
Gas grows up: Cautiously optimistic?