Photo: Woodside CEO and Managing Director Peter Coleman
BEIJING, Apr. 1 (Xinhua) -- With the help of emerging trade platforms, global LNG market is experiencing rapid evolution from rigid bilateral contracts to greater liquidity, said Woodside CEO and Managing Director Peter Coleman in an exclusive interview with Xinhua ahead of the opening of the 19th International Conference & Exhibition on Liquefied Natural Gas (LNG2019).
LNG2019 will open in Shanghai on April 2 and last to April 5. Peter Coleman is a speaker at the plenary forum “A Sustainable Fuel for a Sustainable Future” to be held on April 3.
Gas demand expected to remain strong
“Natural gas has a big role to play in responding to the dual challenges of climate change and energy poverty,” Coleman told Xinhua.
The global energy industry is undergoing significant changes, as it’s become one of the top priorities for countries in the world to control green house gas emission.
In face of the industry changes, Coleman said that natural gas can support global emissions reduction efforts by displacing higher emissions fuels and enabling growth in renewables by resolving intermittency issues.
With multiple sources of supply and flexibility, LNG could work as the most efficient way to connect customers around the world to gas, he added.
Boosted by growing economies and strong demand for cleaner air, LNG demand will continue to remain strong, particularly in Asia, said Coleman.
In regard to the Chinese market, Coleman expected that China will remain the central player in the Asian market and its demand for gas will keep strong growth.
In order to comply with the International Maritime Organization’s (IMO) low-sulfur rule, the demand for LNG will be further underpinned by the requirement that the global shipping fleet switch to cleaner fuels, Coleman said.
The IMO requires the sulfur content of the fuel oil used by ships should be no more than 0.5 percent m/m (mass/mass) from January 1, 2020, a sharp reduction from current 3.5 percent m/m global limit.
Gas producers in response to market changes
In response to the strong gas demand outlook, gas producers have increased investment in production projects and embraced smart technologies to promote innovation in production processes, according to Coleman.
“Projects have begun to progress again after an investment hiatus,” said Coleman. In addition, producers have sharpened their focus on cost-of-supply and strategies for keeping costs low, whether through leveraging existing facilities or innovation in production processes, he added.
As the largest natural gas producer in Australia, Woodside is leveraging its existing facilities to develop new resources. Under its growth plan, it is creating an integrated 7-train LNG production centre on the Burrup Hub in north-west Australia.
“LNG19 provides us the opportunity to talk to others in the industry about these projects (on the Burrup Hub) and gain a better understanding of the global context and opportunities for collaboration,” said Coleman.
Global LNG market with greater liquidity
With global LNG trade growing, Coleman said that “we’ve seen a rapid evolution in the global LNG market from rigid bilateral contracts to greater liquidity”.
Data from the International Gas Union showed that global LNG trade grew 12 percent from the previous year to 293.1 million tonnes in 2017, the third consecutive record-breaking year for the industry and the highest annual growth since 2010.
Of the total LNG trade, 88.3 million tonnes were non-long-term contracts, an increase of 16 million tonnes from 2016 and comprising a significant 30 percent of total LNG trade.
The global LNG market is also consolidating, said Coleman, as very large portfolio players establish themselves as buyers as well as sellers.
The abundance of new supply, combined with the LNG revolution, is fueling dynamic growth and diversification, with more and more trading routes emerging.
According to Coleman, Woodside is also fostering online trading platforms that will facilitate liquidity in the market and assist with matching demand from buyers with available supply.
“These emerging platforms will support efficient trading and bring greater transparency to what has historically been a very opaque and rigid market,” said Coleman.
In order to promote LNG trade, Coleman said the most effective action would be introduction of global carbon pricing that would drive efficient emissions reduction and coal-to-gas switching.
LNG 2019, a triennial event, was first held in 1968. This year marks the first time the conference to be held in China, the world’s fastest growing LNG market. LNG 2019 is presented by the International Gas Union (IGU), Gas Technology Institute (GTI) and the International Institute of Refrigeration (IIR).
The Shanghai conference, the largest LNG event ever held in China, is hosted by China LNG Association, China Gas Society, Chinese Association of Refrigeration and China Gas Association. An estimate of over 170 enterprises and 1,800 representatives from 53 countries and regions will attend the conference. (Contributed by Jiang Yujuan, Zhou Yuran)
A single purchase
