LNG must become more price-transparent and sustainable to thrive in next decade

The trend towards LNG commoditization has gathered pace, fueled by significant additions of elastic supply and demand and growing liquidity in both physical and financial LNG markets. This presents immense opportunities to LNG stakeholders. But the prospect of supply shortfalls and gluts through the next decade to 2030 is a warning sign that the industry is still exposed to abrupt investment cyclicality, a phenomenon known to cause disruptive supply shocks, price volatility and demand destruction. The transition to a more sustainable growth path will require a deeper transformation of LNG into a more competitive, transparent and cleaner fuel. Trimming costs Cost competitiveness will be key for this capital-intensive commodity to establish itself as the fossil fuel of choice in an increasingly crowded and competitive power generation market, and accelerate the adoption of LNG in new industries such as transport and agriculture. The industry’s biggest growth potential lies outside the traditional large demand centers of Europe and Northeast Asia, but these areas also present its biggest hurdles in the form of downstream inefficiencies, uncertain regulatory environments and highly embedded price subsidies. “The industry must focus on keeping its costs down, and this is particularly important for LNG. In many of its… continue reading

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Source: CTRM Center

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