Asia/Pacific News
IEA: Asia Must Reform Market for LNG Expansion
Asian governments must take steps to reform markets if they want to expand liquefied natural gas (LNG) supply and keep up with demand, according to the International Energy Agency (IEA).
In a report, the organization said that Asian LNG supply suffered from limited flexibility and pricing issues, both of which made the market inefficient.
"The advent of new LNG supplies represents a golden opportunity for Asia, but first the region's governments must address the rigid and illiquid markets that undermine affordability and accessibility for consumers," said IEA Executive Director Maria van der Hoeven.
Gas prices are currently four times as high as prices in North America, and can be up to five times as high during winter.
"For gas to be a sustainable contributor to energy security in the region, Asia must look to reforms," she said.
The IEA noted that such reforms would not be quick or simple, as the LNG supply chain requires substantial capital and energy.
Changes will be especially difficult for countries who have regulated low end-user prices.
However, said the IEA, such moves are necessary in light of the fact that around 150 billion cubic metres (bcm) in new LNG supply is expected to become available between now and 2020, while Asian demand will far outstrip that and grow by around 250 bcm in the same period.
The organization also warned of other pitfalls which have plagued some Asian LNG producers, including cost overruns which the IEA said was "hindering the ability of gas to compete" with other low-carbon electricity sources such as nuclear and renewables.
Many Asian shipping companies have also been vocal about LNG's role in the future of maritime industry, having previously said that it will be "fuel of the future."
