Atlantic Basin LNG US Market Dynamics

SUMMARY

Abstract

Overview

Introduction

This is the first in a seris of two briefs, entitled Atlantic Basin LNG Market Dynamics, that focuses on the LNG markets in the US and Europe.LNG is an increasingly important alternative energy source in both the US and European energy landscape. By analysing the largest LNG market in the Atlantic Basin, it is possible to understand the long term development of the Atlantic Basin market.

Scope

• An understanding of the market dynamics driving the LNG market in the United States.
• The unique position of the United States in the global LNG market.
• An overview of the global LNG market, and the factors that is leading LNG growth.
• A overview of the major Atlantic Basin LNG producers, and their ability to fulfil the supply needs of the Atlantic Basin.

Report Highlights

LNG prices are not as volatile as natural gas prices, especially in the years prior to 2005. LNG, although used principally for power generation, is mainly a peak shaving commodity. That is, it is stored to offset seasonality and high peak periods. This explains the lower price volatility of LNG compared to natural gas.

Canada has been the major supplier of natural gas to the US market. However, Canadian gas exports to the US has fallen by seven percent over the past five years. LNG is therefore a viable solution to compensate for the decreasing production of gas and gas imports from Canada.

Algeria is the largest exporter of Atlantic Basin LNG (24.68 bcm) followed by Nigeria (17.58 bcm) and Trinidad and Tobago (16.25 bcm).

Reasons to Purchase

• Understand what are the fundemental reasons for the growth in the US LNG market.
• Understand what motivates the LNG market towards short-term contracts and spot market transactions.
• Gain valuable insight into the present trends in LNG investment and its impact on future LNG growth.

TABLE OF CONTENTS

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • LNG is becoming increasingly important as an alternative fuel source
  • SUMMARY
• ANALYSIS
  • The Atlantic Basin will compete for Pacific Basin LNG
    • LNG is traded globally in two major markets - the Atlantic Basin and the Pacific Basin
  • LNG will enter a period of rapid growth in the medium term
  • Europe and North America are the main Atlantic Basin LNG consumers whilst the major producers are African and Caribbean
  • LNG plays an increasingly important role in the US
  • LNG is a niche in the Atlantic Basin natural gas market
  • High LNG demand influences investment and policy
    • High LNG consumption is fuelling high import terminal investment and overcapacity
    • High LNG consumption is fuelling high import terminal investment and overcapacity
    • High LNG consumption is fuelling high import terminal investment and overcapacity
  • To spur investment, LNG regulation has become decentralized and less intrusive
    • There is no single federal or state agency with sole LNG oversight responsibility
  • The Atlantic LNG market will become more competitive
    • Short-term contracts and spot trading will gradually dominate Atlantic LNG transactions
    • Energy market liberalization is a primary reason for the decline of long term contracts
    • Spot markets enhance the competitiveness of the Atlantic Basin LNG market
    • The LNG spot market is influenced by the price differentials in different markets
    • Although based on natural gas prices, LNG prices are somewhat less volatile
• APPENDIX
  • Definitions
  • Methodology
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: US LNG Projects
  • List of Figures
    • Figure 1: Global LNG regional markets
    • Figure 2: Historic and projected LNG growth in three regions
    • Figure 3: 2006 Exports of Atlantic Basin Producers
    • Figure 4: 1996 - 2020 Actual and expected growth in natural gas and LNG consumption in the Atlantic Basin
    • Figure 5: Expected US Atlantic Basin LNG consumption 1996 - 2020
    • Figure 6: 2006 US LNG imports by source
    • Figure 7: LNG import terminals are all located along the industrialised eastern US seaboard and oil producing Gulf Coast
    • Figure 8: Increasing LNG imports will not keep up with expanding terminal investment
    • Figure 9: Forward prices Henry Hub versus NBP (2008-13)
    • Figure 10: US Price of Imported Gas and LNG 1999-2006