What will the liquefied natural gas (LNG) market of tomorrow look like? Today, a number of newer business models have emerged due to rapidly changing dynamics that have impacted the market, including increasing resource availability, new technologies and new sources of demand.
According to Deloitte’s report, Remodel, reinvent: How technology and changing business models are impacting the future of LNG, the LNG market of tomorrow will be more flexible, liquid and accessible, shaped by new business models and technologies.
Key findings of the report include:
- Supply growth: Overwhelmingly, survey respondents saw most of the new liquefaction capacity being built in the Americas, driven by the number of high profile projects currently under construction in the United States. Rapid supply growth is also expected in Russia and Mozambique.
- New sources of demand: Unlike supply, survey respondents see most rapid demand growth in the Asia Pacific Region over the next five years, driven by both demographic and economic growth. China, India and Pakistan were cited as the biggest source of new demand over the next five years.
- New business models: Short-term contracts will play an increasingly large role in LNG. On the other side, respondents do not see companies developing U.S.-style tolling projects in other countries, citing a range of reasons including regulatory, market and project scale challenges. Markets will rely on shorter-term, more flexible and potentially more volatile contracts.
- Adapting new technologies: Digitalisation and big data analytics, machine learning and blockchain could have an impact on the LNG industry, with a particular interest in deploying blockchain to facilitate trade. However, the industry appears to be unsure about how to best adapt and deploy new technologies. This is likely due to both technical complexity and the difficulty in generating consensus around a single system.
Bart Cornelissen, partner and Energy & Resources leader commented: “The regional imbalance in supply and demand is expected to continue, which offers opportunities also for GCC players to take advantage off. At the same time technology and business model innovations change the competitive landscape, and as such a clear strategy how to play and win in the LNG market will be required.”
“As Asian economies drive the near term demand for LNG, it will create opportunities for energy infrastructure investors looking to capitalise on this macroeconomic shift by developing or investing in the supply chain. The ongoing change in energy mix in net consuming economies will provide an opportunity to resource exporters to seek routes to end markets through direct investments,” said Adnan Fazli, Director and Energy & Resources Leader, Financial Advisory, Deloitte Middle East.