World Gas Intelligence: Top 10 things to watch for the World Gas industry in 2022

The roller-coaster year of 2021 is over, but "volatility" is likely to continue to be the key word in the global gas industry this year. The accelerating energy transition has become a more real threat, with more consuming governments committing to net zero emissions, putting more pressure on producers to meet consumer demands for cleaner fuels, more investors tightening investment controls, forcing gas suppliers to be reluctant to back new LNG projects. World Gas Intelligence has identified 10 things to watch out for in 2022 for the World's Gas industry.

Despite the roller-coaster ride of 2021, "volatility" is likely to continue to be the key word in the global gas industry this year. In addition to the ongoing threat of COVID-19 to economic recovery, high global gas prices market volatility, particularly in Europe Asia, have become significant risks to near-term gas demand. In the longer term, the accelerating energy transition becomes a more real threat. Gas suppliers are reluctant to back new LNG projects as a growing number of governments in consuming countries commit to net zero emissions, putting more pressure on producers to meet consumers' demands for cleaner fuels investors tighten investment controls. World Gas Intelligence has identified 10 things to watch out for in 2022 for the World's Gas industry.

Asia's gas market is becoming more chaotic

The big key theme for the world LNG market in 2022 will continue to be "uncertainty", including whether there will be another predicted cold winter, whether there will be a continuation of the coronavirus pandemic, gas shortages , in particular, whether LNG plant outages will occur frequently. Weather experts predict that the colder wetter weather brought by La Nina will likely continue into March even Into April, with low temperatures spreading through January February. China's LNG demand growth is likely to slow this year after overtaking Japan as the world's largest LNG importer last year. But if spot prices remain high, China may continue to sign more LNG contracts, which LNG traders hope will help free up more spot supplies rebalance the gas market.

A chain reaction triggered by the price of natural gas

High spot LNG prices in Asia have far-reaching implications, including sellers' delivery defaults prompting LNG buyers to impose tougher penalties on new contracts raising questions about the role of natural gas as a transition fuel in emerging markets the energy transition. LNG traders are once again in the news in the natural gas industry after failing to meet their delivery commitments in Pakistan. Dutch TTF prices in Europe were higher than Asian spot LNG prices last month, prompting many traders to switch ships to Europe even if they pay twice as much as usual to carry them, because gas prices there are higher than oil-linked Asian gas markets, helping them make excess profits. In emerging markets, natural gas was once seen as a viable alternative fuel due to coal production constraints, but in order to avoid over-reliance on expensive LNG, emerging countries are looking to renewable electricity as a new alternative.

Europe continues to be a driving force for gas development

Low gas inventories in Europe continued delays in the approval of Russia's Nord Stream 2 pipeline are likely to keep European gas prices high into the summer period starting in April, which will also influence prices in Asia. According to data The European Gas Infrastructure company, Gas stocks in Europe were only 56% at the start of 2022, down 73% at the start of 2021. Competition for spot LNG volumes between Europe Asia this winter depends on the weather, with more flexible LNG carriers heading to Europe in the first quarter of this year as Asia is well supplied. But traders say future supply Russian pipelines will have a decisive impact on European gas prices.

Gazprom plays an important role in the market

Nord Stream 2 is expected to be approved before the first half of this year. Once operational, the pipeline will increase the flow of Russian gas to Europe, just as gazprom is restricting supplies to Ukraine Poland, so exports this year will be closely tied to whether this strategy continues. As gas prices remain high, Gazprom's annual spending is set to hit a record, in line with Russia's view that gas will play a bigger role in the future energy transition. However, Russia is also working hard to implement its carbon reduction strategy, including the development of carbon capture storage business hydrogen energy business, is preparing to conduct carbon market trading tests on Sakhalin Island. At present, with the exception of gazprom's Kaliningrad LNG project the novatek Yamal unit 4 production increase, there are no additional LNG production capacity additions final investment decisions for new projects this year. Overall, Gazprom's LNG exports will maintain moderate growth. Rosneft's monopoly on pipeline gas in Russia could be broken as its rival tries to sell 10 billion cubic metres of gas a year to European customers.

American rules first

In 2022, as new projects come on stream, the United States will overtake Qatar Australia to become the world's largest LNG exporter. But higher more volatile price swings could lead to U.S. lawmakers imposing restrictions on energy exports. So far, though, none of the forceful measures to restrict exports have worked. But some U.S. politicians have argued that LNG development massive exports of cheap natural gas will hurt U.S. consumers. With no spending plans for a potential climate transition on the agenda in 2021, politicians are hoping for a tough regulatory administrative policy this year. First up is methane regulation, which, if the EPA's comments on vehicle fuel economy are any guide, could lead to tougher methane controls than earlier proposals.

The final investment decision of US LNG project is very important

Some LNG projects in the United States had been shelved due to poor commercial interest in a fierce competition with Qatar, its market rival, but they could become competitive at high gas prices. U.S. LNG producers signed a number of long-term contracts in the second half of last year. With the construction site identified, Chenier expects phase 3 construction in Copas Cris, Texas, to begin in mid-2022, with Phase 4 also on the way; Other projects include Japan's Jera Power's LNG project, the four-train Qatar North LNG project approved last year, Rosneft's Ust-Lugo LNG project (formerly a Baltic SEA LNG project), As well as Australia's Woodside's Scarborough -Pluto LNG project, column 2, the Santos Barossa gas field's Darwin LNG plant.

Gas development in the Middle East

Market players in the Middle East double down on gas in 2022. Saudi Arabia's $110 billion Fuja unconventional gas project, restarted last year with financial backing Saudi Aramco, will help reduce the kingdom's reliance on crude oil for power generation support production of blue hydrogen, well in line with its ambitious 2060 net zero emissions target. ABU Dhabi will aggressively develop unconventional sour gas businesses as part of the UAE's plan to become self-sufficient in gas by 2030. The UAE's 2050 net zero target means carbon capture, storage electrification of the oil gas business will be accelerated. Qatar is finalising partners to expand its very large LNG project, while total's winning of a large project in Iraq last year will serve as a model for the integration of gas solar power in the region.

The Eastern Mediterranean region becomes the focus of the gas business

Confirmed discoveries in the eastern Mediterranean will be the focus of the gas business this year, attracting a large number of international oil companies North America Europe. Exxon Mobil Qatar Energy are expected to make 5-8 trillion cubic feet (141-227 billion cubic meters) of gas discoveries in Cyprus's Glaucus region in the first quarter. Chevron's exploration assets in Israel Cyprus will lead to a second round of financing eventual LNG exports. Egypt will export gas to Lebanon in the first quarter of this year. Israel already supplies gas to Egypt Jordan, the Eastern Mediterranean Gas Alliance will lead to more cooperation between members regional gas sales. On the whole, with the deterioration of the relations between the EU Russia, the Eastern Mediterranean region is becoming a potential supplier of natural gas to Europe, the competition of natural gas trading within the region will become increasingly fierce.

Europe's artificial intervention in the markets will continue

Record gas prices supply shortages will prompt significant changes in climate energy policy in some European countries. Eu headquarters is experimenting with less important policy initiatives, such as a European regional emergency gas reserve through a voluntary gas procurement platform. However, if the natural gas market continues to spiral out of control, especially as the nord stream pipeline gas 2 to play a more important role in the energy transformation, further requirements to reduce carbon emissions in energy imports, you need more human intervention market behavior, these can give is on the verge of unbalanced pattern of energy increase new uncertainties. Eu headquarters has given a clear signal that eu members can maintain some flexibility in pursuing the path of energy transition, has proposed classifying natural gas nuclear as sustainable technologies under the green investment label.

The pressure of ESG (Environmental social governance) continues to increase

As investors move forward with their own carbon-neutral strategies, they will demand that oil gas producers implement credible net-zero plans within their business portfolios. As we have seen recently with decisions by two large mainstream asset owners, the Dutch pension fund the Norwegian oil fund, some high-carbon assets will be selectively divested. If companies lag behind in their decarbonisation efforts, board members may be removed. At the same time, oil gas companies will be required to further increase range 3 emissions the sale of their products. In some areas, there will be a requirement only to decarbonize oil gas products, but also to reduce oil gas consumption. The pressure may be different in the US Europe, but investors want to see more low-carbon action oil gas companies.

For more information about energy trading platform, please consult Eurasia International Energy Trading Market Management (Jiangsu) Co., LTD., the manufacturer of financial service platform, storage logistics platform, dangerous chemical business license application platform bulk energy trading platform.

Source: Shanghai Oil Gas Trading Center

Disclaimer: This article is Shanghai Oil Gas Trading Center. The dissemination is for reference only does imply that the company endorses its views is responsible for their authenticity, nor does it constitute any other recommendation. If you find any works infringing your intellectual property rights on our official account, please contact us