Emerging countries at the centre of gas demand are increasingly looking at flexible strategies to import gas, while suppliers who are also sometimes stakeholders are working together to optimise market efficiency.
This theme was at the centre of discussion during Gastech’s second day conference of Global Business Leaders’ Panel titled ‘How New & Emerging LNG Importers Are Reshaping the Waterborne Gas Market.’
Olivier Mussat, Chief Investment Officer for International Finance Corporation, which focuses on emerging markets and has an energy book worth $11 billion, said it is key to find optimum projects suitable for the country in need of energy and preferably those that have a share of equity and debt.
“We are in a time where the price of LNG is very competitive. When countries look at their energy mix, LNG is at the front and centre - it’s a good position to be in because you can move quite fast; an FSRU (Floating Storage Regasification Unit) can be in place in 18 months compared to an LNG facility which can take years,” Mussat said.
“FSRUs can help bridge the gap between domestic gas and renewables in emerging markets.This is something a lot of companies are missing,” he added.
An emerging market which is globally among the top importers of LNG, but also looking to boost domestic gas exploration and production is Pakistan.
Sher Afgan Khan, Additional Secretary (Policy), Ministry of Energy, Petroleum Division of Pakistan, said the country, which used to be gas-dominant, plans to return to this position in two ways; by auctioning blocks for exploration and production to increase domestic gas production and by privatising LNG importing for companies that can leverage the existing gas infrastructure.
Pakistan currently imports 1200 bcf of LNG annually through long-term contracts.
“We’re fortunate to have LNG come in at the right time but would like more companies come in to E&P. We will have 30 blocks on auction and invite companies to come and explore Pakistan. We have a progressive, educated and skilled middle class with energy experience in the Middle East,” Khan said.
The country still has a gas supply gap of close to 1bcf, he said, which can only be filled by increased LNG imports or by increasing domestic production. Five applicants so far have been granted rights to open private LNG terminals, two of which will come onstream in the next two years, Khan said.
Meanwhile, Mussat said that while the investment company has several investments in import terminals in emerging markets like Pakistan, Bangladesh, Latin America and Africa, the potential for renewable should not be ignored.
“A solar project can be carried out by two people - an electrician and a lawyer, while an LNG facility requires billions of dollars in long-term investment, so let’s not get blindsided” he said.
Mussat said that the private arm of the bank looks are investment models in projects that are agile, sustainable and suitable for the country in need of energy, rather than what a bank decides is a viable to invest in.
“We have to take a realistic and sustainable view on what a country’s grid can handle in terms of capacity,” he said.
As parting guidance, Mussat said: “Climate adaptation will become more important to survive so think of the customer and look to power sector who have been successful in pushing large projects with small capital.”
Separately, Mitsui & Co. Energy Marketing and Services (USA), Inc., a subsidiary of Mitsui & Co that has several investments in LNG projects in the U.S. and has taken over the Cameron LNG facility in Hackberry, LA, is becoming the U.S. energy trading and marketing platform for Mitsui & Co in North America.
Eiji Yanagawa, the unit’s President & CEO, said new demand for LNG in the next five to ten years will come from emerging markets, which will be key and important for the whole industry.
“We have access to financing to support new emerging buyers. Big demand centres are Asia, South East Asia, Europe, Lain America and the Middle East,” he said.
“China is moving from coal to gas powered plants. The government is supporting regulatory frameworks and the government has opened the LNG market to the private sector and we see new domestic demand coming up,” he added.