Report: LNG Bunker Markets in U.S. and Europe Have Estabished, but are Seeing Slower Uptake Than Hoped For

Singaporean consultancy TRI-ZEN said that it expects LNG demand to rebound and supply shortages to occur in the future

Although liquefied natural gas (LNG) bunker markets have managed to establish themselves in Europe and the U.S., uptake has been "slower than hoped for," according to an emailed paper by Singaporean consultancy company TRI-ZEN International Pte Ltd. 

Industries were said to be still struggling with the "chicken and egg" syndrome, with ships holding off on decisions without established LNG infrastructure in place and vice versa. 

A lack of international uniformity in LNG regulations has also purportedly caused frustration, especially as legislation can be contradictory from area to area, said TRI-ZEN.

However, LNG markets are expected to overcome its hurdles and strengthen, in part because of American shale gas production and expected future shortages. 

Although markets are currently facing oversupply due to the weak price of crude oil and weaker demand, TRI-ZEN said that it expects this imbalance to be corrected "faster than many expect."

Chinese demand is expected to increase given future monetary stimulus provided by the Chinese government, while the Organization of the Petroleum Exporting Countries' (OPEC) lack of supply cut is also expected to do little to "undermine the shale advance."

"Burgeoning population growth in the Middle East, combined with higher living standards expectations, could see Saudi Arabia become a net energy importer by 2030," said the company.

"The current price-inspired delay, or postponement in FID (final investment decision) on gas projects could lead to tightening of gas supply and shortages from 2019/20."

The company also added that speculations of a worldwide return to "cheap energy" are "misguided and naive".

It expects future gas demand to outpace oil demand growth by more than double year-over-year, with demand to rise to 4,500 billion cubic feet (bcf) from the current 3,500 bcf by 2025. 

Demand is also expected to rise with the completion of Europe's Trans European Transport (TEN-T) Network, which is aiming to establish LNG infrastructure at all core European ports by 2030. 

The past year has seen a number of LNG projects on the continent receive TEN-T funding, including bunkering facilities in both Denmark and Poland.