ASIA LNG Demand to Quadruple By 2030 The biggest buyers of liquefied natural gas (LNG) in Northeast Asia—which account for more than half of the world’s LNG market—could see their total subcontracted demand rising fourfold by 2030

1. Asian LNG Demand To Quadruple By 2030
Sanjay H. Indulkar
sindulkar@hotmail.com
www.linkedin.com/in/sanjay-harishchandra-indulkar
ASIA Opportunities : LNG
Tuesday, December 18, 2018
ASIA LNG Demand to Quadruple By 2030
The biggest buyers of liquefied natural gas (LNG) in Northeast Asia—which account for
more than half of the world’s LNG market—could see their total subcontracted demand
rising fourfold by 2030, source : Wood Mackenzie.
At the same time, U.S. LNG export capacity is set to significantly increase in the coming
years with several projects awaiting final investment decisions (FIDs) and several others
currently in commissioning stages.
Rising LNG demand in Asia is welcome news for the variety of projects under
construction and commissioning in the U.S. Gulf Coast and Atlantic Coast.

2. Source : International Energy Agency
WORLD OUTLOOK
Natural Gas
LNG appears as the
main driver of inter-
regional natural gas
trade growth,
sustained by strong
export capacity
expansion.

3. The People’s Republic of China becomes the world’s
leading importer of natural gas. Driven by continuous
economic growth and strong policy support to curb air
pollution, China accounts for 37% of the global increase in
natural gas consumption between 2017 and 2023, more
than any other country. As domestic production cannot
keep pace, China becomes the world’s largest natural gas
importer by 2019 and with 171 billion cubic meters (BCM) of
imports by 2023, is mostly supplied by liquefied natural gas
(LNG).
Compared with the previous decade, the industrial sector
takes the lead from power generation as the main driver of
global growth in demand for natural gas. Emerging markets,
primarily in Asia, account for the bulk of this increase with
uses as a fuel for industrial processes as well as for feedstock
for chemicals and fertilizers. Industrial gas demand also
grows in major producing regions, such as North America
and the Middle East, to support expansion of their
petrochemicals sectors.
The United States is the source of much of the growth in
natural gas production and most of the additional LNG
exports. The United States, already the world’s top producer,
accounts for almost 45% of the growth in global production
and nearly three-quarters of LNG export growth.
Development of destination-free and gas-indexed US LNG
exports provides additional flexibility to the expanding
market.
Three major transformations are set to shape the evolution of Global Natural
Gas Markets In The Next Five Years.

4. Asian LNG Demand To Quadruple By 2030
China and emerging Asian markets drive growth in global natural gas consumption growth
2017 was a year of strong growth for natural gas, mainly driven by China. Global natural gas
demand grew by 3%, the highest increase since 2010. China, where demand grew 15%, accounted
for nearly a third of the global increase, driven by a determined policy effort to improve air quality
through coal to gas boiler conversions in the residential and industrial sectors. This led to an
unprecedented surge in LNG of 1.6% throughout the forecast period. Emerging Asian markets, led
by China, account for more than half of the growth in global natural gas consumption to 2023.
imports, placing China as the world’s second largest LNG importer after Japan.
The global natural gas market passes the 4 trillion cubic meters (TCM) mark by 2022,
China becomes the largest natural gas importing country in the world by 201 leading emerging
Asian gas market growth. An increasing role for natural gas – defined as a clean energy source – in
every sector of China’s economy is backed by strong policy support from the 13th Five-Year Plan.
China’s demand grows at an average of 8% per year throughout the forecast period, accounting
for over a third of global demand increase. The share of imports in China’s supply rises from 39% to
45% over the forecast period. Other emerging Asian economies increase their natural gas
consumption for industry (including fertilizers and petrochemicals) and power generation, and
develop their domestic markets and infrastructure to import more LN figure ES1

5. Natural gas supplies 22% of the energy used worldwide, and
makes up nearly a quarter of electricity generation, as well as
playing a crucial role as a feedstock for industry. Natural gas
is a versatile fuel and its growth is linked in part to its
environmental benefits relative to other fossil fuels,
particularly for air quality as well as greenhouse gas emissions
Houston-based LNG player Tellurian Inc. is trying to
change the way the LNG business evolves. Instead of
pricing its LNG on the Henry Hub bench-mark, it will price
LNG on the Japan-Korea-Marker (JKM), a benchmark
price assessment developed by commodities data
provider S&P Global Platts, which includes spot physical
cargoes delivered ex-ship into Japan, South Korea, China
and Taiwan.
Small-scale Asian LNG projects
facing big challenges
southeast Asia, the world's third
most populous region and its
fastest growing LNG demand
center, with consumption due to
nearly quadruple from 10.8 million
MT in 2017 to 40 million MT/year by
2025, The disperse nature of
Southeast Asia's geography and
energy demand, scattered over
thousands of islands, means
smaller LNG ships, small-scale
regasification terminals and break
bulk LNG hubs would be required
to deliver the gas molecules to
some of its future customers.
• A Fraction of Demand
• Diseconomies of Scale
• Domestic Price Challenge
• Clustering Demand

6. With an annual growth of 10% in 2017 to 290 million tons (Mt) and 8.3% in the first half of 2018Liquified
Natural Gas (LNG) demand is rising faster than expected. Accounting for 44% of global demand
growth in 2017, China is the main driver of the growth as the government has made natural gas a
key policy choice to reduce air pollution and restructure its high-carbon energy mix. Demand from
emerging economies has also boomed in past years. LNG prices have soared since the fourth
quarter of 2017 with spot deliveries above $10/million British thermal units (MBTU) in summer 2018 and
above $12/MBTU for forthcoming winter delivery
This is changing as investment in new LNG export capacity is coming. A final investment decision
(FID) on a huge project (LNG Canada) was taken at the beginning of October and several projects
are close to FID.
Qatar in pole position
Second wave of US LNG projects under way.
Russia on the starting block
Mozambique finally coming
Papua New Guinea’s expansion close to FID
Canada: tax exemptions help
Nigeria’s LNG partners working hard on LNG expansion
The Next Wave of Global LNG Investment
Conclusion:
The new wave of global LNG projects is taking shape Investment in new LNG
projects is coming back worldwide, with projects advancing in Qatar, Russia,
Mozambique, Papua New Guinea, the USA and Canada. some 185 MTPA of
capacity (excluding expansions from the first wave of US LNG projects) that
promoters expect to sanction before the end of 2019 and that will be
commissioned by 2022-2024. That may ease a rapid tightening of the LNG
market in the early 2020s, although delays in FID and construction, and
cancellations, cannot be ruled out

7. Traditionally, LNG has been used largely for power generation. However, this is
changing as market conditions in traditional LNG-importing countries change
and new importers with different dynamics join the market.
The growth in demand for LNG used for base load power generation will
be limited as gas in many major economies can’t compete with
renewables.
Rising renewable penetration will expand LNG’s role in providing flexible
power generation to balance the electricity grid in many major
economies.
The use of LNG in the industrial and transport sectors will push up gas
demand, particularly in Asia where environmental concerns are on the
rise.
The opportunity for LNG in base load power will be mostly in floating
storage and regasification-based emerging markets that are plagued by
power shortages.
Diverse drivers to LNG demand

8. PAGE 4
How big is the demand growth?
The world consumed 285MMt of LNG in 2017. The substantial expansion of
global LNG trade in 2017 is unlikely to repeat in 2018 and further slowdown is
expected in 2019-22. Global LNG demand is expected to reach 330MMtpa by
2022. Southeast Asia and Europe will drive a rebound in global LNG
―Lowering LNG prices during the early 2020s and accelerating infrastructure
build-out in South Asia are the key to unlocking LNG demand in the region,‖
Evolving LNG purchase models
Traditionally, LNG importers buy LNG via long-term, take-or-pay, and delivery
location-fixed contracts. Japan, China, and India have all seen some progress
in setting up the required trading platforms. .
A supply shortage risk and price spike ahead?
30-33MMtpa of new capacity will be added from 2018-20. Australia has the
last batch of projects to come on-stream before the end of 2018 but full
ramp-up will take a couple of years. The boom in U.S. LNG supply will end in
2020. Global capacity will peak at 396MMtpa in 2021 and will begin to fall
behind demand post 2025. To support further demand growth, final
investment decisions (FID) on new supply projects will need to be made in
the next few years to provide sufficient supply post 2025.
Global LNG Demand/Supply-Capacity Balance

9. Sanjay H. Indulkar
sindulkar@hotmail.com
www.linkedin.com/in/sanjay-harishchandra-indulkar