Featured Insights

Featured Insights

Floating LNG is a Disruptive Force Supporting Asia’s Journey to Gas Liberalization

With Gastech 2017 in Tokyo approaching, interest in Asia’s evolving LNG (liquefied natural gas) industry remains high despite conditions that will see supply continue to outstrip demand as more liquefaction capacity comes on stream in Australia and the United States.

Regulatory reform and commercial innovation continues as buyers’ negotiating power increases. China, Japan and Singapore have all started out on long journeys to create gas trading hubs. Interest continues to evolve and shorten the traditional long-term supply contracts, linked to oil prices, which have dominated the LNG industry in Asia. Removing the destination clauses that restrict LNG supply to specific LNG terminals is very much in the interests of buyers and market liberalization efforts in the region.

This has important implications for the conception and development of gas projects — looking out three to four years post-financing — when they will be in operation. The established model of adding scale to realize further economies is challenged.