Australia’s rise to leading LNG exporter and what’s next for the LNG industry
As some countries with rapidly growing economies race to meet rising energy demand, others race to build out LNG export capacity in order to meet it. While Qatar has held the mantle of lead LNG exporter, that title will soon belong to Australia after years of developing its shale gas plays and strategically investing in LNG export infrastructure.
Like the U.S., the development of unconventional oil and gas reserves in Australia has reinvigorated an industry that was seeing dwindling resources in conventional coal seam gas supplies. This discovery fortuitously coincides with the high-growth energy market in Asia — a market not expected to peak for decades. Australia is well-positioned to supply Asian countries like Japan, China, South Korea, Taiwan, and India with the natural gas they need as these countries look to rely less on coal and more on clean-burning natural gas to meeting rising energy demand through 2050.
Even though Australia is uniquely positioned as a major LNG supplier in the APAC region, other countries are rapidly expanding their LNG capabilities as well. The U.S., Qatar, and Russia will continue to jockey with Australia for leading global supplier over the next 10 years. So even though Australia may not hold onto their new position for long, they will certainly reshape the global supply of LNG for decades to come.
Immense opportunity in an uncertain LNG market
In a recent Petroleum Review article, ION Allegro’s natural gas product manager Mark Davis explains:
“While demand for LNG in Asia will rise over the long term, today there is a glut in the market as long-term projects come online. A byproduct of the global race to meet demand, the glut is driven by two issues. First is the abundant supply from markets like the U.S., which has a boundless supply of shale gas. Second is that LNG demand in Asia has yet to reach its peak – despite a steady increase over the last decade.
But many of these LNG export facilities take years to plan and build. Countries like Australia, Qatar, Russia, and the U.S. are racing to build out these projects, many of which have been in the works for 10 years in anticipation of the booming demand in Asia for natural gas. However, experts predict demand in Asia will eventually catch up and drive up prices to a profitable level — much to the relief of LNG exporters around the world.”
So how can LNG market participants prepare for the changing LNG landscape?
Competition in the global LNG market is fierce, and it’s likely the U.S. or Qatar will replace Australia within a few years after it becomes the leading exporter of LNG. This means market participants need to prepare for uncertainty both in the long term and in the short term as they look to make a profit.
Today’s LNG industry participants need energy trading and risk management (ETRM) software designed to provide end-to-end transparency and analytics to support optimized decision making. As a leading software provider to the LNG industry, ION Commodities can help simplify the LNG supply chain, minimize risk, and maximize profit.
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