Page 22 - Gi June/July 2019

lng’s leading role on the global energy stage

(30 per cent) disagree. FIGURE 2 GROWTH IN LNG PRODUCTION AND TRADE
As an alternative to oil-indexation,
long-term contracts could be linked
to gas hub prices or even consumer
price indices. However, a deeper
issue underlies this: a fundamental
disconnect between LNG seller and
buyer interests.
Sellers need long-term cashflow
certainty to support major investments.
Buyers, in contrast, need long-term
flexibility to ensure consistently
competitive prices, as well as the ability
to adapt volumes and contract tenure to
market changes.
New contractual terms are indeed
emerging as the market diversifies,
and research suggests more innovation
is required in this regard. Nearly
three-quarters (72 per cent) of survey
respondents believe LNG buyers need
more flexibility in LNG contracts (e.g., to
reduce volumes, shorten tenures, and
change delivery locations).
More contractor-led models are
also emerging, which involve smaller,
faster, more agile solutions, such as
the development of smaller-scale
FLNG vessels and the conversion
of existing LNG carriers into FLNG
vessels. In these situations, it is more
likely that a contractor will liquefy gas
on behalf of the operator and thereby
reduce risk and cost.

FIGURE 3 TOP INFRASTRUCTURE BARRIERS FOR THE GLOBAL LNG MARKET IN 2019

22

DNV_LNGReport.indd 3 16/05/2019 16:09