Ejiofor Alike with agency report
The efforts of Nigeria and other gas producers to monetise their gas resources face fresh threats as the Secretary General of the Gas Exporting Countries Forum (GECF) has stated that the global gas markets will become more volatile in coming years if the low price environment continues to deter investment in new supply projects.
While investors are yet to sign the Final Investment Decision (FID) for the Brass LNG as a result of investors’ indecision, the Train 7 of Nigeria LNG Limited is also yet to take off.
Also the Olokola LNG being proposed between the border towns of Ondo and Ogun States have literally been abandoned following the withdrawal of other shareholders from the project.
Reuters reported that Asian spot liquefied natural gas prices fell from a two-year high this week as production restarts of Angolan and Australian plants boosted supply back into a subdued market, which had been reeling due to outages and high seasonal demand.
The spot price of LNG LNG-AS for February delivery to North Asia fell to $9.50 per million British thermal units (mmBtu), 25 cents lower than last week’s level, traders said.
“If it (low investment) continues like this then after five years we will be experiencing a very challenging situation in terms of security of supply,” Seyed Mohammad Hossein Adeli, a former advisor to Iran’s minister of petroleum, told Reuters in an interview at the GECF’s headquarters in Doha.
“It will make the market volatile and shoot up the demand side and then it would have its impact on the prices,” he said.
Global gas prices will remain under pressure “over the medium term as additional production capacity in Australia and the U.S. comes on stream”, Adeli said.
The GECF, an inter-governmental organisation founded in 2001 and headquartered in Doha is made up of 11 of the world’s leading natural gas producers including Iran, Qatar and Russia.
The forum, whose members control over 70 percent of the world’s natural gas reserves, said in a global gas outlook report released on Tuesday that demand for gas would increase by about 50 percent by 2040, a similar growth to that experienced over the past 16 years.
The report forecast domestic demand for gas among GECF countries to increase from 1,000 to 1,300 billion cubic metres (bcm) by 2040 and said Iran would see the strongest domestic growth, followed by Russia, Egypt, Iraq and Nigeria.
Critics have derided the GECF for not managing the natural gas market as the OPEC exporting group has done with oil, but Adeli said the GECF had no intention of taking collective action to control prices and would instead, continue to provide members analytical support.