Asia Gas Markets Conference held at crossroads of LNG boom and energy transition

The Asia Gas Markets Conference 2024 was held in the commodities trading hub of Singapore in October in the thick of action for the LNG industry as delegates discussed wide ranging topics from decarbonization to the shadow fleet evading Russian LNG sanctions.

Ongoing tensions in the Middle East have raised new concerns about energy security and these geopolitical pressures have injected significant price uncertainty into the market, Senior Minister of State, Low Yen Ling told delegates.
"LNG markets are also expected to remain tight towards the end of 2024 due to forecasts of a colder winter," she said in her keynote speech. "Natural gas will remain vital to countries' energy portfolios until we find an alternative low-carbon and cost-competitive energy source with an equally robust global supply chain."

The conference was held in the backdrop of the Singapore government announcing the expansion of its onshore LNG terminal with a new FSRU based facility that will add 5 million mt/year or about 50% of existing regasification capacity, to meet power generation needs.

Singapore announced its new state-backed centralized gas company Gasco will start procuring gas for the power sector from 2026 and bring about greater diversification of supply and economies of scale.

The government also unveiled one of the world’s first state-backed initiatives to implement carbon capture for gas-based power plants during the combustion of LNG—this could be a game changer for the industry as most initiatives focus on carbon capture in the upstream and transportation processes, but most of the CO2 is emitted during combustion.

An overview of LNG Market Trends in Asia showed the benchmark JKM price outlook for winter is mired with uncertainty with potential for volatility, Megan Jenkins, Associate Director, LNG, said in a market overview.

She said factors influencing the JKM price outlook include cold winter in the northern hemisphere, lack of new liquefaction projects in 2024, large open market interest from investment funds in TTF and escalation of Russia-Ukraine and Middle East conflicts.

Also, LNG supply growth is expected to outpace demand growth in Asia-Pacific from 2025, loosening the global market, while the exceptional heatwave that drove up incremental LNG needs in Asia in 2024 is expected to moderate next year, Jenkins said.

INDUSTRY STALWARTS
Several of the LNG industry’s top decision makers set the tone of conversations at the gas conference held by S&P Global Commodity Insights.

China is set to see a double-digit year-on-year growth in LNG imports in percentage terms in 2024, Yaoyu Zhang, Assistant CEO and Global Head of LNG and New Energies at PetroChina, said. For reference China imported 71.32 million mt, or 98.4 Bcm, of LNG, in 2023.

Zhang said China’s average cost of LNG imports is much higher than domestically produced gas and pipeline imports, and an LNG price of $13-$14/MMBtu is too high for power generation, particularly in the northern part where pipeline gas is available.

China's gas demand is expected to grow to over 600 billion cubic meters by 2040 from about 400 Bcm presently on energy demand, YingYing Zhou, director LNG origination at Cheniere said. Cheniere is emerging as one of the world’s largest LNG suppliers.

"We're also spending a lot of effort in developing our climate strategy to reduce the emissions intensity of the LNG supply chain…For example, we have an ongoing collaborative program with upstream producers, midstream companies, shipping lines as well as academic institutions to quantify, monitor, report and verify the GHG emissions across the whole value chain," she added.

Woodside Energy CEO Meg O'Neill said in an interview that global LNG markets are expected to grow by up to about 50% in the coming decade as China, South Asia, and Southeast Asia exhibit a strong appetite to absorb additional new supply, quelling concerns of a looming glut.

NEW MARKETS
Several new importers and exporters represented the growing LNG marketplace.

Thailand’s B.Grimm is looking to import a maximum of seven LNG spot cargoes in 2025, ramp up to about 10-12 cargoes by 2028, amid firm demand, with demand of slightly under one million metric tons by 2028, Andrew Kirk, executive vice president, head of LNG Business, said.

"This year, the imports were on spot and were based on the JKM. Next year, we will be more than happy to enter a 12-month strip. The strip procurement will also be based on the JKM unless the country’s Energy Regulatory Commission decides otherwise," he said.

"There will be more buyers in the market, and the move brings with it an opportunity for better pricing," Kirk said.
During the conference week, Cambodia’s Royal Group emerged as a new entrant to the market, seeking LNG suppliers for its proposed 900 MW LNG-fired power plant which will be the country’s first gas-based power project, Thomas Pianka, Division CEO for Energy, said.

"There is a need to take the seasonality of domestic power generation into consideration. But the demand for electricity [in Cambodia] does not really fluctuate that much and is growing strongly year on year," Pianka said.
Earlier expectations of an oversupply of LNG in 2025 have faded with global LNG markets not likely to see significant supplies until 2027, around the time when more projects come online, Gregory Joffroy, senior vice president for LNG at TotalEnergies, said.

Some LNG projects that were due to come on stream in the coming months or years have been delayed and that will impact gas balances, and LNG supply comes in waves because it involves massive capex, Joffroy said.