(MENAFN- The Peninsula) The Peninsula
Doha: Despite the decline of spot gas and LNG prices and the impact of Covid-19 pandemic, Qatar has had a ''remarkable run in the first half of 2020, an expert from S & P Global Platts, a leader of energy information, analytics, and benchmark prices, said at the 43rd monthly Gas Lecture series of the Gas Exporting Countries Forum (GECF).
At the same event, GECF Secretary-General Yury Sentyurin highlighted the significant role of the Asia Pacific region in connecting supply and demand nodes across the gas market. The GECF estimates that gas demand can only reach historic 2019 levels in 2022, given the current situation. Sentuyrin also noted that low gas and LNG prices will make LNG a more competitive fuel and support the role of natural gas in achieving the 17 UN Sustainable Development Goals. Furthermore, he reaffirmed that the GECF continues to be a platform for knowledge sharing and exchange of information amongst industry stakeholders, and remains a source of unique tools and capabilities to navigate new market realities.
Dexter Wang, Manager for Asia Pacific (APAC) Market Engagement at S & P Global Platts, was speaking at the event entitled ‘The Global LNG Market: Connecting the Dots'', where he focused on the key themes of LNG supply and demand during Covid-19, changes in LNG contractual norms, and the dynamics of benchmark gas and LNG prices, with a special emphasis on Asia Pacific region. Qatar, the world''s largest exporter of LNG, has a historical partnership with APAC as a reliable LNG supplier to the region. It is also worth mentioning that Qatar is one of the key member countries of the GECF, hosting its permanent Secretariat since its inception in 2008.
''What''s interesting is that we have already seen Australia and the US see their first year-on-year drop in LNG exports this year, which means that these countries are relatively exposed to spot prices and have to react to the current low price in the LNG market. On the contrary, Qatar managed to increase its LNG exports for the majority of the first half of this year which is truly remarkable, considering the current low price environment, noted Wang, whilst explaining the supply side dynamics of the LNG market between the three of the world''s largest exporters.
''Qatar has minimal spot price exposure and the majority of Qatar''s LNG exports is linked to crude oil price or some other prices that is not directly affected by LNG price, he added.
Although the definition of what is regarded as ''spot price varies, according to Wang, S & P Global Platts considers ''true spot as anything that trades today and gets delivered within three months, whilst anything below three years is considered a short-term contract and above four years are medium- to long-term contracts. The share of spot price in the traditionally long-term contract dominated industry has increased in recent years with the International Group of LNG Importers (GIIGNL), one of the GECF peer partners, estimating the spot share to be about 34 percent of total LNG market at the end of 2019.
As a coalition of the world''s leading gas producing nations, the GECF community prides itself as reliable and long-term energy suppliers, a principle that was reaffirmed by Sentyurin.
He said: ''Particularly about gas contracts, at the GECF we do believe in the prospects of long-term contracts due to the important benefits they bring to both the buyer and the seller. In fact, supporting long-term contracts is one of the stated objectives of the GECF member countries and this is stipulated in the 2019 Malabo Declaration, which was the outcome of the 5th GECF Summit in Equatorial Guinea.
''The Declaration notes that the GECF''s member countries ''support the fundamental role of long-term gas contracts as well as the gas pricing based on oil indexation, to ensure a stable investment in development of natural gas resources.
''Therefore, consumers and producers, through holistic discussion, need to agree together on the way contracts should look in the future to protect them from the fluctuations of spot market, added Sentyurin.
During the event, Wang''s presentation also discussed the forward curve, a financial derivative traded on a given day for future delivery settled by cash, with particular reference to the Platts Japan Korea Marker (JKM), as he explained the difference with other benchmarks.
MENAFN31720200006311010ID1100570682
-MENAFN31720200006311010ID1100570682-->
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.