According to a new report by CEDIGAZ, the International Center for Natural Gas Information, LNG as a fuel will capture a significant market share in the transport sector by 2035. The greatest potential is seen in road transport, were annual demand is projected to reach 96 million tons per year (mtpa) in CEDIGAZ’ base scenario while demand in the marine sector could grow to an estimated 77 mtpa. The rail sector could add another 6 mtpa to global demand. However, the development of LNG as a transport fuel faces a number of challenges, and will have to go hand in hand with the development of fuelling infrastructure.

Fuel cost differentials will drive the growth in trucking sector

Projections for global road transport LNG demandUse of LNG in land transport will be largely limited to heavy duty vehicles (HDV) and will essentially be driven by the difference between the price of diesel and that of LNG. In contrast with the marine sector, environmental legislation is unlikely to play a major role in triggering the adoption of LNG as a fuel for land transportation, as traditional fuels and technologies will be able to comply with the gradual tightening of emissions standards. However, the cost advantage of LNG relative to diesel currently provides a strong economic incentive in the trucking industry. In its base scenario, CEDIGAZ projects a worldwide demand of 45 mtpa in 2025 growing to 96 mtpa in 2035, with China representing almost half the global market. China has several features that combine to make it a prime candidate for the development of LNG in the road sector. The country has the world’s largest inland goods transport market and has already developed an extensive LNG supply infrastructure, initially as a means of transporting gas from remote fields or to consumers who were not connected to the pipeline supply network. With at least 100,000 LNG vehicles and 1,100 refuelling stations at the end of 2013, China already has a head start over the rest of the world in this nascent market. However, gas price reform in China may slow LNG growth there. LNG should also carve out a significant market share in the US, Europe and the rest of Asia.

International Gas Prices – September 10, 2014

NBP: very sharp increase

BNP and coal priceThe provisional NBP price for September was €20.6/MWh ($7.9/MBtu), up nearly 18% in one month, but down 23% compared to the situation one year ago (€26.6/MWh). This change in the NBP is due to several factors. The change is primarily related to the significant downward correction in prices in June and July (€16/17/MWh) which usually results in reverse financial movements when there is excess. This was the case when the price fell slightly below the coal equilibrium price. The second increase factor is related to the

International Gas Prices – 2014 trends (at the beginning of September)

Brent: shrinkage anticipated in 2014

Brent Shrinkage anticipated in 2014Since the beginning of the year, Brent has varied between $98/B (September) and $115/B (at the beginning of June), which is fairly close to the extremes seen in 2013. The anticipated average for 2014, which has fluctuated between $105 and $110/B, is currently situated at $105/B, slightly down on 2013 ($108.60/B). Movements the price of Brent remain highly uncertain in the light of possible influencing factors: whether or not there is an increase in exports from Libya; whether or not negotiations with Iran on nuclear power are successful (deadline postponed to 24 November); whether or not the insurgents in Iraq affect production and exports in the south of the country; whether or not the tension in Ukraine escalates; the dollar exchange rate (increasing against the Euro since May, a factor depressing the oil price); the global economic climate (increased growth expected in 2015) and the outlook for the stock exchanges. The field of factors affecting the price of Brent is therefore obviously very wide. In any case, the increase in US production due to shale oil is playing a moderating role and partly explains the slight decline experienced since 2012.