Asia Demand

The international market for liquefied natural gas (LNG) is an inherently risky business where returns depend on paying back huge upfront infrastructure investments with cash flows based on volatile energy prices. Tectonic shifts in the market are giving North American LNG exporters and natural gas producers an opportunity to become pivotal players. The world is on the cusp of an LNG supply glut that may last several years, and the old order of long-term supply contracts with prices indexed to oil is being phased out in favor of a market structure that features more destination flexibility, more spot market sales—and, for U.S. and maybe some Canadian and Mexican LNG exporters—more liquefaction “tolling” deals with LNG prices linked to gas. Today, we continue our look at what these changes mean for the North American energy sector.