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Low Investment in Global Gas Markets

The efforts of Nigeria and other gas
producers to monetise their gas resources face fresh threats as the
Secretary General of the Gas Exporting Countries Forum (GECF) has stated
that the global gas markets will become more volatile in coming years
if the low price environment continues to deter investment in new supply

While investors are yet to sign the
Final Investment Decision (FID) for the Brass LNG as a result of
investors’ indecision, the Train 7 of Nigeria LNG Limited is also yet to
take off.
Also the Olokola LNG being proposed
between the border towns of Ondo and Ogun States has literally been
abandoned following the withdrawal of other shareholders from the
Reuters reported that Asian spot
liquefied natural gas prices fell from a two-year high this week as
production restarts of Angolan and Australian plants boosted supply back
into a subdued market, which had been reeling due to outages and high
seasonal demand.
The spot price of LNG LNG-AS for
February delivery to North Asia fell to $9.50 per million British
thermal units (mmBtu), 25 cents lower than last week’s level, traders
“If it (low investment) continues like
this then after five years we will be experiencing a very challenging
situation in terms of security of supply,” Seyed Mohammad Hossein Adeli,
a former advisor to Iran’s minister of petroleum, told Reuters in an
interview at the GECF’s headquarters in Doha.

“It will make the market volatile and shoot up the demand side and then it would have its impact on the prices,” he said.
Global gas prices will remain under
pressure “over the medium term as additional production capacity in
Australia and the U.S. comes on stream”, Adeli said.

The GECF, an inter-governmental organisation founded in 2001 and
headquartered in Doha is made up of 11 of the world’s leading natural
gas producers including Iran, Qatar and Russia.
The forum, whose members control over 70
percent of the world’s natural gas reserves, said in a global gas
outlook report released this week that demand for gas would increase by
about 50 percent by 2040, a similar growth to that experienced over the
past 16 years.
The report forecasts domestic demand for
gas among GECF countries to increase from 1,000 to 1,300 billion cubic
metres (bcm) by 2040 and said Iran would see the strongest domestic
growth, followed by Russia, Egypt, Iraq and Nigeria.
Critics have derided the GECF for not
managing the natural gas market as the OPEC exporting group has done
with oil, but Adeli said the GECF had no intention of taking collective
action to control prices and would instead continue to provide members
analytical support.

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