Unconventional gas report identifies emerging global trends

• 8 years ago (2016-02-15)
• Junior Isles

Asia 898 Europe 1094 North America 1026

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A new study released by the World Energy Council says lower oil prices and weakened Asian demand has resulted in the virtual disappearance of the price spread between the Japanese LNG and UK markets in 2016. Additionally, it notes that US prices remain depressed due to the continued build-up of domestic supplies.

The report – ‘Unconventional gas, a global phenomenon’ – developed with partner Accenture Strategy, also identifies three emerging global trends:

· Shifting portfolio allocations: current price uncertainties are resulting in operators shifting their capital to more flexible, shorter-cycle investments rather than in deep well projects which is exemplified by the United States.

· International growth of unconventional gas operators: new operators across the world are realising the global opportunities and bringing new supplies to the markets such as China, Australia and Argentina which will have an effect on markets before 2020.

· Interconnected markets: excess supplies in some countries have led to price normalisation and other structural shifts that are making the market more global and transparent across the three main regional hubs of Asia, Europe and North America.

In order to realise the full potential of the global gas phenomenon, the study goes on to highlight the need for certain decisive interventions to alleviate uncertainty in the market.

It says industry should bring a higher degree of focus to portfolio allocation, risk management, and efficiency and continue to seek new and innovative investment partnerships to deliver projects.

Policymakers are urged to establish policies that promote a liquid market and competition needed for security of supply and the formation of clear price signals.