Page 31 - The Pakistan Accountant

O THER AR TICLES What are the Future Prospects of the Global LNG Industry?  Saeed A. Chughtai “It is said that something as small as the flutter of The prices of LNG have been especially volatile since the 4 butterfly’s wings can ultimately cause a typhoon half 2008 International Financial crash . The high gas prices way across the world ” - Chaos Theory. In evaluating any in 2008 fuelled interest of the investors. This in turn led 1 future prospect, this statement becomes all the more to an evolution in the LNG markets prompting structural important. It is thus more productive to determine the changes. A huge influx of investment in LNG projects boundaries of our analysis and identify the stakeholders. resulted in under capacity utilization further shadowed in 2014 by relatively depressed oil price owing to US Shale LNG is obtained by freezing the Natural gas at Oil discoveries coming on line. The danger of over supply temperatures as low as -256° Fahrenheit (-161° Centigrade and resultant dampening of prices exists. New. sites are Approx). The condensation process results in reduction of being discovered, Iraq with the third largest reserves of volume that is almost 600 times smaller than the original Natural gas is racing to get its facilities operational. On 2 gaseous volume . This makes LNG highly portable the other hand Nuclear power generation is now being and capable of being transported over long distances viewed with contempt after the Fukushima I Nuclear duly addressing the operational issues associated with Power Plant disaster in 2011. Japan and Germany are now pipeline transportation. The effective large volume also moving away from Nuclear power to LNG and renewable 5 makes it economically viable. The sellers thus can benefit sources . Future is difficult to predict, but what can be from supply arbitrage. said with certainty is that LNG business has its own set of challenges. Traditionally the LNG business was very straight forward. It essentially involved Long Term contracts, with take or Global LNG Markets pay clauses between the Buyer and Seller. The supply was executed through dedicated contracted LNG ships . The Global LNG Market can be categorized as under . 6 3 The LNG business has now taken lime light due to geopolitical impediments, security of supply issues, cost  The North East Asia ( Japan, Korea, Taiwan, etc.) of transportation, line losses and inadequate transport  Europe ( United Kingdom, Spain, France Belgium) system pipelines associated with Natural Gas. In Pakistan the fast depletion of existing reservoirs has prompted  United States consumers / consumption centres to look towards other  Emerging Economies ( India, Pakistan, Africa etc) 7 alternatives like LNG. The North East Asia: Alot of effort and research has gone in, to gauge the future Demand Trends prospects of the industry The LNG business is capital This market has traditionally been the major market intensive and money has been poured in to enhance the for the LNG industry. The close proximity of the region facilities both at the manufacturing and receiving ends. to the producing regions and lower cost of the product The Pakistan Accountant | Apr-Jun 2014 29