Natural Gas: Entering the New Dark Age
About the workshop
In March 2015, KAPSARC convened the first workshop in its global gas markets energy workshop series. The workshop was hosted by the Clingendael International Energy Programme at the Huys Clingendael in The Hague, The Netherlands. The workshop, attended by policymakers, researchers and industry practitioners, was conducted on the basis that the discussions could be reported on a non-attribution basis.
Many in the natural gas industry view the rise in the share of natural gas in the global energy mix as inevitable. However, this industry optimism is not reflected in the approach of policymakers. Liquefied natural gas (LNG) markets provide an insight into the state of the global gas business, because:
- The next wave of LNG supply projects is faced with uncertain demand growth—in Europe because of substitution by Russian imports and in Asia because of competition with coal.
- Imported natural gas is expensive relative to coal and, for the time being, developing countries value low cost energy for industrialization ahead of long-term environmental risks.
- North American LNG will likely secure a significant market share but does not guarantee lower prices for Asian consumers.
- Despite importer appetite to move away from long-term LNG contracts, often indexed to oil prices, it is far from certain that sellers will be capable of financing major infrastructure in the absence of such contracts.
Whatever the future holds, we can be certain that it will be different than the one envisaged as recently as five years ago and, probably, than the one we can envisage today.
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