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Soaring LNG prices pose risk to growth of global demand
Liquefied natural gas (LNG) demand growth risks being slowed by higher prices, said BG Group Plc, the biggest importer of LNG into the US.
- Bloomberg
- Published: 23:41 March 11, 2008
Bangkok: Liquefied natural gas (LNG) demand growth risks being slowed by higher prices, said BG Group Plc, the biggest importer of LNG into the US.
"Significant" cost increases for projects and moves by governments to give priority to domestic supplies over exports are driving up LNG prices in spot and long-term contracts, Martin Houston, president of BG North America, said yesterday at the Gastech conference in Bangkok.
While the price gains benefit suppliers, they may hamper industry growth, he said.
Demand for natural gas is being buoyed by increasing use of cleaner-burning fuels for power generation amid efforts to reduce greenhouse gases blamed for global warming.
Spiraling crude oil prices, uncertainty about how carbon pricing will affect the use of coal as a fuel and about growth in the use of nuclear power all make future growth in demand less certain, Houston said.
Unavoidable fuel fix
"The status quo leaves natural gas as the near-term and unavoidable fuel fix for power generation but we need to watch the signals very carefully for the future to ensure that price levels don't undermine the long-term future," Houston said.
BG's Lake Charles LNG import terminal in Louis-iana and its Elba Island terminal in Georgia accounted for 55 per cent of US LNG imports last year.
Spot market trading of LNG will reach 40 million metric tonnes this year, Philip Olivier, president of Suez Global LNG said yesterday.
Spot cargo trading will increase to 20 per cent of total volumes traded in the global LNG market, he said at the conference. He didn't give a comparison for the previous year.
"Arbitrage opportunities" in LNG may fall this year in the event Japan cuts imports and restarts a nuclear power plant that was shut last year for safety checks, he said.
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