Ten big questions facing the Asia Pacific natural gas market in 2021
As 2021 begins, we look at the 10 "big questions" facing the Asia Pacific (APAC) natural gas market. These questions reflect the key issues that will shape up regional natural gas and energy market development with implications on the global market and will guide the research agenda for the IHS Markit APAC natural gas coverage for 2021. Aggregately, the region's LNG demand accounts for 70% of the global trade and growing. How much the growth will be in 2021 and beyond depends on a variety of factors.
- Will the recent spot price volatility decelerate the region's LNG import growth?
- How will other supply sources impact the region's LNG import demand?
- Will APAC LNG pricing hubs gain acceptance among players?
- Carbon-neutral LNG cargoes: A fad or a trend in APAC?
- What pricing mechanisms do Asian buyers prefer for new LNG contracts?
- Will more gas-fired power capacity reach FID in 2021 compared with in 2020?
- Will there be more long-term PPAs underpinning gas plants in Southeast Asia?
- How will midstream reform progress increase gas penetration?
- What plans will policymakers pursue to achieve carbon neutrality commitments?
- Will new upstream developments alter regasification terminal plans in Australia?
Some markets across APAC rely almost entirely on one source of supply to meet their gas needs; many others have multiple options—domestic production, pipeline imports, and LNG imports, and supply side competition is getting fierce. Even within LNG imports, the recent spot price volatility—below $2/MMBtu in the 2020 summer and surpassing $40/MMBtu in the 2020/21 winter—may force LNG importers to rethink their procurement strategies for the years to come.
On the demand side, gas-fired generation growth has been a crucial factor driving Asian gas and LNG demand over the past few years. New capacity investment will vary by market, as policymakers and project developers balance costs against power grid security and air pollution control efforts. Looking over the longer term, policies, including those expected in 2021, to address carbon emissions in markets with existing net-zero carbon pledge may alter gas market development in the region. Other markets across APAC, if not considering net-zero carbon goals themselves, will also need to make changes accordingly as they will be impacted from the global energy trades or financing availability for their energy projects.
Market reforms to improve efficiency, increase competition, and raise gas penetration through cost reduction for end users—is making progress. However, the speed at which liberalization and therefore how much more gas penetration is achieved will ultimately depend on political will and market designs created in each market.
Learn more about our coverage of the hydrogen and renewable gas through our Asia-Pacific Regional Integrated Service.
Jenny Nguyen Yang is aseniordirector coveringthe Greater China gas market at IHS Markit.
Zhi Xin Chong is adirector coveringthe South and Southeast Asia gas market at IHS Markit.
Posted 5 February 2021
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