Balkans News: Investors are scrambling to put money into LNG

Investors are scrambling to put money into LNG. Having only just spent $1.7 billion on its new terminal, Singapore, which has ambitions to become a regional gas-trading hub, is already planning a second. Shell is building the world’s largest ship, the Prelude, at an estimated cost of $12 billion, to serve as a floating terminal off the Australian coast (seawater is a handy coolant in the liquefaction process).

The beginning of a genuinely global market in LNG is a transformation similar to what happened with oil. It was also once a tightly controlled commodity traded in mainly regional markets, until the advent of the supertanker in the 1960s.In the past, the huge capital and running costs involved in LNG have hampered the market’s growth. It is bought and sold mainly on long-term contracts, broadly tied to the oil price.

Though spot trades have more than doubled their share of the LNG market since 2000, to 27%, there is still no single global price: Asian LNG is costly, reflecting China’s eagerness to cut coal use (to spare its citizens’ lungs). Japan has been buying LNG in record amounts to keep the power on amid the post-Fukushima nuclear shutdown. European prices are lower (a result of the dash to coal and plentiful Russian and Norwegian pipeline gas).
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