AMSTERDAM, July 29, 2014 /PRNewswire/ --
After decades with little interesting happening, the global
natural gas market has shown unprecedented dynamism in the past ten
years. This has led to divergent gas prices between regions across
the world. But this trend is expected to reverse. The shale gas
revolution in the United States
and strong growth in international trade of liquefied gas should
bring regional prices closer together, according to the Atradius
Gas Market Outlook.
Atradius observes that regional prices have rapidly diverged
over the past decade. Gas prices in the US have been falling,
reflecting the rapidly growing production of gas from shale-beds.
Gas prices in Asia, on the other
hand, have tripled over the same period and are now by far the
highest in the world. This is because Asian gas prices are linked
to the price of oil which has surged and gas consumption has grown
rapidly as a result of economic development. Europe's gas prices are partially linked to
the price of oil, which explains why they have roughly doubled. But
these trends are expected to change.
First, Atradius expects that the US will quickly become
self-sufficient in gas and prices will gradually climb. This is a
result of the very recent US shale gas revolution which has led to
a production surge. Imports have halved, despite the power sector
having substituted gas for coal. These developments are likely to
last and the US will start exporting liquefied natural gas (LNG) to
Asia or Europe. Gas exports are triggered by the price
difference between the regions.
Second, Atradius expects prices to remain at current levels in
Asia assuming Chinese production
rises, US exports develop and the LNG cost can be contained. Demand
is growing fast and has triggered a boom of LNG imports as local
supplies are unable to keep up with the rise in demand. The surge
in demand and the high gas prices have triggered a flurry of
investments in LNG facilities, particularly in Australia.
Third, Atradius expects the gas prices in Europe to rise eventually. Focus on
environmental issues has led to an EU-wide trading system of carbon
emission and a renewable energy policy in Germany. Perversely, the measures have reduced
gas consumption in the power sector and encouraged the use of coal:
a much more polluting energy source. Whereas gas production is
gradually declining, demand may pick up on the back of gradually
improving economic conditions. Russia, Europe's main supplier, is expected to
benefit, although commercial and political reasons will push
European countries to diversify suppliers. LNG imports, even from
the US, might play a role over time.
John LoriƩ, Atradius Chief Economist: "The shale gas revolution
in the US, LNG trade growth and demand surge in Asia are key forces at work. We think US gas
prices will gradually climb and Asian prices will remain at current
levels. And with some upward pressure on European prices, we see
prices in these regions inevitably coming closer, reversing the
trend of the past decade and clearly rising across the board. Over
time we expect the cheap energy advantage currently enjoyed by the
US industry to disappear, and that helps restore the competitive
position of European industry. Dependence on Russian gas, moreover,
will diminish."
About Atradius
The Atradius Group provides trade credit insurance, surety and
collections services worldwide and has a presence through more than
160 offices in 50 countries. Atradius has access to credit
information on 100 million companies worldwide. Its products help
protect companies throughout the world from payment risks
associated with selling products and services on credit.