Can US be preferred gas supplier?

Baku, Azerbaijan, August 11

By Leman Zeynalova – Trend:

It is not so obvious that the US will be a preferred gas supplier over current suppliers, Sam Barden, the director of SBI Markets, an international commodity trading and advisory company, told Trend.

He pointed out that overall gas consumption is likely to increase globally as countries move away from coal. Also as the use of renewables continue to grow, gas will be important as a peak generating tool, and therefore underpin demand for gas, added the expert.

“On the supply side, Russia, Iran, Qatar are the big three suppliers, plus Australia, however it is unconventional gas which is changing the balance of markets. Unless the US can supply cheaper than Russia, it will not impact European markets. Russian and Iranian gas into Europe will be more economical than US gas,” Barden believes.

He noted that gas will increasingly be priced against local benchmarks, not a single global price.

“In the short term, it could keep pressure to the downside for gas, however the reality of how much US could reliably supply is unknown, so it may be that customers prefer reliable suppliers from existing producers and be prepared to pay a fair price for this,” added the expert.

The US is expected to export more natural gas than it imports in 2017, according to the August Short-Term Energy Outlook of the Energy Information Administration (EIA).

The US’ status as a net exporter is expected to continue past 2018 because of growing US natural gas exports to Mexico, declining pipeline imports from Canada, and increasing exports of LNG, said the report.

EIA expects exports of LNG from the country to increase.

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Follow the author on Twitter: @Lyaman_Zeyn

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