Will U.S. Liquefied Natural Gas Find A Market In Asia?
https://www.forbes.com/sites/judeclemente/2017/07/23/will-u-s-liquefied-natural-gas-find-a-market-in-asia- - - - - - - - - -
I'm sharing this because when I read the title, I thought "What a stupid question; it already has."
Then I read the first sentence of the article.
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The short answer to the question posed is...yes....it already has.
After 18 months of exporting, some 35% of all U.S. LNG has reached Asia. It's clear that the Asian giants want to reduce their coal over-reliance by using more natural gas. I've documented that fact here and here. The time is now to diversify because local gas prices are almost as low as those in the U.S. - after being 4-5 times higher just a few years ago. You could call $6 LNG the “sweet spot” for building new demand.
Moreover, the ability of the Asian giants to produce more of their own gas is in serious doubt. For example, there are great shale opportunities in China, but the future is limited due to water shortages, a pipeline dearth, low prices, physical remoteness of the resource, uncertainties for foreign experts in dealing with China's precarious state-owned enterprises, and a variety of other factors.
China accounts for 7-8% of current global gas demand, but has less than 1% of proven global gas reserves. It is noteworthy, however, that China's gas production has impressively increased 45% since 2010 to nearly 145 Bcm.
Global LNG import leader Japan is a curious case because many of its contracts with Qatar are coming to an end in the early-2020s. And Japan has approved ending the highly restrictive destination clauses in LNG contracts. Some believe that there's a wedge of LNG demand opening up in the mid-2020s, helping U.S. export capacity reach full utilization.
The problem is that the Asian countries haven't sufficiently invested in gas infrastructure and they haven't liberalized gas markets. Price controls, rigid contracts, inflexible markets, and burdensome regulations have blocked gas trading. For example, only about 40% of China's population has access to gas. So, policy needs modernized big time...
