In an article for Energy Voice – a magazine focusing on the renewable, oil, and gas sectors – Simon Redmond, a commodities specialist at S&P Global Ratings, outlines the ‘top ten’ developments to watch out for in the liquefied natural gas (LNG) market.
Redmond explains that while LNG has historically maintained a relatively stable price, the coming months will likely see increased market volatility as demand declines, production continues at similar rates and the resulting global glut diminishes unit prices.
“In order to reflect the new ‘low-price’ environment, LNG contracts are being re-negotiated to favour utilities and off-takers over the traditionally favoured producers,” according to Redmond.
As a result – and given tighter profit margins – Redmond warns that LNG projects may take longer to repay their debts, meaning an adverse impact on related credit ratings could be on the cards. He also notes that despite the current glut, the need to entice investors to capital intensive LNG projects should continue to drive producers’ strategy, efficiency and, in turn, profits.
To read the full article, please click here.