BAKU, Azerbaijan, April 19. Gas prices will return to long-run marginal cost levels over the mid to longer term, Anatol Feygin, Executive Vice President and Chief Commercial Officer of Cheniere Energy, told Global Voice of Gas, Trend reports.
“We have been indicating for some time that we expected the LNG trade to enter a tighter period for the next few years as supply additions slow. However, the rapid rebound in gas demand we saw in 2021 tightened the global market faster than anticipated, while the tragic situation in Ukraine has provided a further layer of risk and uncertainty in Europe. We see an abundance of natural gas resources worldwide and strong competition to monetise them, which indicates to us that we can expect prices to return to long-run marginal cost levels over the mid to longer term as markets rebalance,” said Feygin.
He expressed hope that while a return to pre-pandemic conditions looks unlikely before the middle of this decade, for the sake of buyers and end users, the market will reach lower price points sooner rather than later.
“These high, volatile prices aren’t sustainable for the world and the market. I will add that we target over 90 percent of our volumes to be committed under long-term contracts, with the steady HH-based pricing I spoke about earlier. Our long-term customers enjoy this price stability at a fraction of the current prompt market prices,” said Cheniere’s executive vice president.
“LNG projects are designed to run for many decades. So, the investment decision is really looking beyond the current volatility and assessing the need for additional LNG supply over coming decades. And we see robust long-term growth for LNG, despite the near-term market volatility. As we discussed earlier, even through the fog of the pandemic, we saw the first half of this decade as a period of tightness in the LNG market. There are numerous signals that point to growing demand for LNG as economies around the globe add natural gas power generation for growth, to replace coal and to backstop renewable sources. That demand will underpin new investments both on the liquefaction side and the regasification side of the equation for some time. We are quite confident in growth opportunities ahead and expect to take a final investment decision on our Corpus Christi Stage III project in the summer of 2022 – a project that will add over 10 MTPA to our current 45 MTPA production capacity,” Anatol Feygin added.
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