Falling gas prices, driven by a mild winter and the efforts of governments around the world to reduce energy consumption, not only rekindled interest from potential new LPG buyers, but also prompted Asian importers to such as India, Bangladesh and Thailand to get back into the game and introduce spot market imports. Bloomberg Senior Energy Reporter Steven Stapczynski examines the number of new LNG buyers in Asia and the future of fuel in the region.
The buyers above are important to an industry that needs fast-growing emerging economies to support the market and ensure new export projects come online to pay off in the long term. Yes, European demand for LNG is rising as countries seek to replace the Russian gas pipeline, but suppliers fear ambitious environmental targets could lead to a rapid decline in the region’s fossil fuel consumption.
It also highlights how the future of LNG depends on its availability. Although spot prices have fallen, they have yet to recover to the levels of the 2010s, when developing countries first developed energy strategies to start importing fuel.
The extractive industry must do everything possible to create an attraction for these price-sensitive buyers. This means signing contracts with more favorable terms for importers so that scheduled deliveries cannot be canceled and prices can be fixed for decades (Pakistan’s energy crisis has been exacerbated by a wave of canceled deliveries).
In other words, new emerging Asian buyers such as Vietnam and the Philippines will only stick to LNG purchases if it is an economical and profitable option. These countries are no richer than Japan or South Korea, which were the first to buy LNG at an exorbitant price under all conditions a decade ago and spoiled the sellers who now do what they want on EU markets. For the first time in history, cash-strapped buyers are daring to impose conditions and dictate their will in order to achieve the feasibility of working with US suppliers.
Photos used: pxhere.com
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