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Ten Year Network Development Plan 2015
0
30
600
900
bcma
Liquefaction capacity
Regasification capacity
Atlantic Basin
Pacific Basin
Middle East
North America
South & Central America
Asia Pacific
Europe and Eurasia
Figure 5.72:
Liquefaction vs. Regasification capacity
(Source GIIGNL 2013)
5.3.4.4 Liquefaction vs. regasification capacity
As shown in the next figure, in 2013 the regasification capacity was more than twice
the liquefaction capacity. The difference between the LNG exporting and importing
capacities is explained by:
\\
The flexibility of the LNG market leads to LNG becoming a fuel of choice and re-
gasification capacity being built in order to take advantage of low LNG prices.
LNG is expected to be replaced either by other sources of gas or by other fuels
when the LNG price is not competitive.
\\
The use of LNG for managing demand variation by a combination of high regas-
ification capacity and stock management. This is the case in the traditionally
LNG dependent markets like Japan, South Korea or certain European countries
like Portugal and Spain, where LNG constitutes a base-load fuel.
5.3.4.5 LNG as a market arbitration tool
The potential contractual right to change the destination of LNG cargos allows LNG
to play an arbitration role between consumption areas. The price difference between
markets can outweigh the extra costs of the maritime transport. The LNG market is
a liquid market. According to the report of GIIGNL, 27% of the total LNG volume was
traded on spot or on short term basis in 2013
1)
, with the remaining 73% traded on
a medium or long term basis. Strict destination clauses may still apply; however,
re-loading of LNG has increased its flexibility. The inherent flexibility of LNG leads to
a high level of uncertainty when defining the potential LNG import scenarios to
Europe. This will not only depend on the availability of LNG and liquefaction capac-
ity, but also on the evolution of the energy demand, the price of alternative gas
sources and the price of alternative fuels, in these competing markets.
1) GIIGNL report 2013: “The LNG Industry”