Buyers in India are in talks with suppliers in the US, Qatar and the UAE for 20-year deals that will protect them from extreme price volatility. While long-term LNG deals that are typically cheaper remain challenging for countries that do not have investment grade status, interest is emerging from those that do.
DRAUGEN WASHINGTON POST DRIVERS
“Emerging markets, particularly in south and southeast Asia, are the core drivers of LNG demand growth over the next 10 years.” “The return of LNG prices to more normalized levels benefits emerging markets the most, as their energy affordability and availability was most impacted by the LNG price spikes last year,” said Saul Kavonic, a Sydney-based energy analyst at Credit Suisse Group AG. While they’re now getting a chance to repair their economies, their gas purchases are also providing producers with a safety net by partly offsetting weak demand from heavyweights in Europe and North Asia. Soaring prices forced poorer nations to turn to more polluting coal or fuel oil, and helped drive inflation. That’s a sharp turnaround from last year when many governments were struggling to ensure energy supply. Vietnam and the Philippines recently bought their first ever LNG shipments. From Thailand and Bangladesh to Colombia, emerging markets were the biggest buyers in the spot market for a second straight quarter earlier this year, according to BloombergNEF. "Liquefied natural gas rates have dipped below fuel oil, encouraging its use in power generation.
Hopefully this will help soften the costs of energy this coming year for these nations suffering from lack of reliable energy supply and inflation if they are able to procure as much LNG supply as they can maintain in their storage facilities. Good for them, stocking up whilst they can. In other LNG news, the gas storage levels in EU driving the gas prices down are resulting in an uptick in poorer nations buying spot cargos at prices they can afford (LNG is currently cheaper than fuel oil).
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