KUWAIT CITY: Weaker than expected demand in traditional Asia markets is leaving several large LNG buyers in the region over-contracted which should help accelerate a transition towards more flexible contractual structures, Nizar Mohammad Al-Adsani, CEO, Kuwait Petroleum Corporation said during his talk at the fifth IEF – IGU Ministerial Gas Forum that was held in New Delhi December 6 on the sidelines of Petrotech 2016.
“As producers reduce investments to re-focus more on cost reductions and budget savings, such efforts may be too late for global gas markets to re-balance during this decade, but could sow the seeds for tighter markets into the next decade,” he said.
According to Al-Adsani, reducing both capital and operating costs will be a major challenge, which could drive sellers to invest in receiving terminals in partnerships with buyers. “Buyers and sellers will have to work together to develop contracts that recognise the changes that are taking place in gas markets around the world. Pricing, volume and destination flexibility and shorter contracts durations will be high on the agenda for buyers.”
As imports from Japan and South Korea decline, the rebalancing of global markets will depend on the rate of expansion in China, India, and other countries in developing Asia, he argued.
