Will U.S. Become the Largest Supplier of LNG to Asia?

LNG carrier

Credit: Slecter/ CC BY-SA 3.0

The U.S. Liquefied Natural Gas (LNG) has reached Asia, after 18 months of exporting to around 35% of all U.S. The giants of Asia want to use more natural gas and reduce their reliance on coal. It looks like an ideal time to diversify, as the local gas prices are reportedly as low as that in the U.S.

The ability of the Asian giants in the context of producing their own gas has concerns due to water shortages, low prices, and other factors. It is reported that China accounts for around 7-8% of the global gas demand, but has less than 1% of proven global gas reserves.

The global LNG import leader, Japan, has many contracts with Qatar, which are ending in the early 2020s. And, Japan has approved the closing of the highly restrictive destination clauses featured in the LNG contracts.

Meanwhile, the policy in Asia needs to be modernised to enhance the investment in gas infrastructure and liberalising the gas markets. The blockages in gas trading are attributed to price controls, rigid contracts, and other factors. Asia’s goal is towards the creation of a hub-based trading system that could enable countries to grow their natural gas usage. The countries like China and India that are still developing have low GDP per capita levels which assure the demand for energy.

It is reported that these Asian giants will account for around half of the new energy use in the coming 15 years. The global gas demand would increase 2% annually by 2025 and 40-45% of that growth would be attributed to China.

Many experts believe that the potential demand for natural gas and the U.S. LNG are limitless and gas would be the world’s primary fuel by 2030.

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