How LNG Promises to Change Natural Gas Markets …and How the Markets are Already Changing LNG!

Commoditising – all gas is gas – nationality less important

Equalising prices – spare LNG can go anywhere

• Low cost transport cost versus arbitrage opportunities
• More than 30% of deliveries now NOT on LTCs
• Easier to build re-gas terminals (or hire FSRU) for backup than rely on new pipelines – optionality

Established truths die – several!

• “Everyone gets rich in Japan”/“US wants all the LNG we can make
• Value of optionality in uncertain times – infrastructure and sales
• All fearless developers forget to look around – oversupply 
• When will they ever learn?

What next?

• Merit order elasticity?
• Delay projects, optimise flows, turn off completely?
• OR find new demand, risk management or business models?
• New use for gas when LNG is available: transportation