Market Above All: LNG, first of all, means market. Market trends means price trends. Except for Japan, Korea and Taiwan where most gas supply is in form of LNG, in all other areas – especially in the United States – only an approximate 1% of gas supplies include LNG. In Europe, this figure currently stands around 7.7%. That means great opportunities for the future, but certainly in very different ways. At the same time, we can see the emergence of new markets like India, China and perhaps one day, Brazil.

Price Mechanisms: Asia, Europe and USA are considered as the main markets for LNG. But price mechanisms definitely vary in each continent. In Asia, LNG has historically played the role of a substitute fuel for power generation.
Within Asia, Japan is by far a major market for LNG. While coal-based and nuclear sources pose a competition in this market; one can see a good start of deregulation which brings changes to the contracts. Contracts are no longer incorporating inflation, instead, they are calling for price reduction on a regular basis. Another important mechanism today is one that would protect the investor when oil price is low, and the buyer when oil price is high. The buyers are becoming more drastic in terms of all operational flexibilities that would enable them swallow more gas. This is a positive change that would certainly give us the opportunity of bringing more LNG into a huge market.
The situation in Korea is a little different. There are a lot of terminals. Deregulation of economy and gas market are the most important developments there. Given the privatization of gas business, we currently see huge opportunities in Korea.
Taiwan has been a constant buyer of gas, mainly from Indonesia. Standing in lower levels than the Japanese and Korean markets, Taiwan will be in demand of new quantities once it launches its northern terminal.

Emerging Markets: The new emerging markets for LNG include India which enjoys a massive potential. Several companies are trying to build relationships in pursuit of long-term clients in India. However, I must say that the situation in that country is a little complex. Despite complications, we will do our best regarding this market since India has tremendously changed and offers great opportunities for potential gas suppliers; especially Iran. We do hope that authorities in India will appreciate that there has to be a mutual trust between buyers and sellers.
China is another new market. There has been much publicity on the launching of this country’s first terminal, to be followed by two others. Nevertheless, we have to educate this vast market. They have to know what are the rules of LNG. This has nothing to do with being competitive since sellers are already taking good risks in projects which are highly capitalistic.
Going back to Europe, the market is educated and accustomed to piped gas. There are huge market potentials. Substitution of coal and nuclear energy with gas is currently a much-discussed topic in Europe and we will certainly discuss plans for the huge LNG market. The competition will undoubtedly be fierce and there is the possibility of rising prices. Along with deregulation, this market also brings additional opportunities for LNG as a way to compete with natural gas.
Last is the USA which has been buying LNG for many years, but at very small quantities. Last year, a short fall of gas supply in that country brought LNG further into attention. This could shape an important market for LNG coming from the Middle East.