Joint Study for Liquefied Natural Gas Market

Abstract

Many East Asia Summit ( EAS countries show an upward trend in energy demand. The role of natural gas in energy supply becomes increasingly important from a variety of aspects which include economic efficiency, diversification of energy, effective use of domestic resources and reduction of environmental burden arising from energy use. The global liquefied natural gas ( LNG market has seen big changes in recent years. In terms of supply and demand, while many new LNG importers are coming into the market, the LNG demand for large importers like Japan, China and Europe is becoming uncertain. Besides, new liquefaction capacities are seemingly to start operation within the next few years. In terms of price, there is a downward trend in both oil linked price and spot price. Importing countries may welcome this trend but attention is required to its side effect for supply side investment. Asian LNG market cannot be insulated from these changes in the global market. Although this recent price trend seemingly indicates that Asia premium issue in the LNG price has diminished, the essential problem has not been resolved. Asia premium will be back depending on crude oil price. Therefore, resolving the Asia premium issue should be pursued and substantive reforms thereon should be recommended to achieve sustainable and sound development of the global LNG market.