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FIGURE 4 TOP MARKET BARRIERS FOR THE GLOBAL LNG SECTOR IN 2019

The increased importance of portfolio players develop to meet the varied needs of LNG Commoditised LNG on the global stage
Along with new contractual buyers and sellers around the world. The LNG market has shifted gas closer
arrangements, the involvement of new than ever to the profile of a traditional
market players could be key to bridging Forces beyond markets commodity.
the divergent interests of LNG buyers Political risk (including trade The flexibility, diversity and
and sellers. agreements) was the leading market responsiveness of global supplies
Historically, certain oil majors (e.g., barrier (17 per cent) to LNG markets can help markets hedge and adapt to
Total, Petronas, BP and Shell) have in 2019 with little global consensus political or trade-related developments.
been the most significant participants. around the next-ranking barriers At the same time, with so many
However, commodity traders, such (Figure 4). At a regional level, there are interconnected markets in play, events
as Trafigura, Vitol, Gunvor and clearer trends developing. that impact regional gas markets
Glencore, are now emerging as a new For example, in North America, fear may trigger the same kind of global
breed by expanding the scope of their of oversupply was ranked at the top economic turmoil as oil price shocks
involvements in LNG markets. In 2017, (19 per cent), while in Asia Pacific, of the past (as was seen with the 2002
the four companies traded around 27mt difficulties establishing long-term political crisis in Venezuela, the 2003
of LNG, amounting to nine per cent of supply contracts shared first place with Iraq war, and the 2010 Arab uprisings).
2
total LNG sold worldwide . political/trade risks (18 per cent). In This bigger role on the world stage is
Such organisations supply LNG from Europe, a lack of government support yet another dimension to the evolution
a portfolio of LNG interests from various and public sentiment against fossil of LNG markets. It looks set to drive
regions. They often also own (or invest fuels were jointly the second-ranked the rise of the global LNG era alongside
in) shipping, storage, and regasification barriers (14 per cent), just behind other important factors, such as the
infrastructure. Portfolio players have an political/trade risks (16 per cent). globalisation and commoditisation
intermediary role between producers It is revealing that these three major of LNG, and innovations in LNG
and consumers of LNG, and this helps regions can have such contrasting technology and business models.
maintain a floor for prices (suiting views on the market barriers for the
sellers), while adding market flexibility year ahead. While those in North
and liquidity (suiting buyers). America wonder if the world can References
Simply put, we are seeing the LNG possibly consume the unprecedented 1. GECF Global Gas Outlook 2040, www.gecf.org/
market diversify like never before – both volume of LNG set for production, those insights/global-gas-outlook
in terms of contractual frameworks and in Asia are worried about securing 2. How four trading houses are shaking up the LNG
industry, www.woodmac.com\news\editorial\
market participants – and it looks likely long-term supply. In Europe, influences how-four-trading-houses-are-shaking-up-the-lng-
that multiple models will continue to outside the market top concerns. industry

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