Approaching Tides: Convergence in World Natural Gas Prices

By Colin Waugh, Partner, SCP Africa Investments

Following a brief overview of the current global supply and demand situation for liquefied natural gas (LNG), this article examines to what degree non-market forces have contributed to a narrowing of inter-regional price differentials. Against an overlay of rapid technological change that has facilitated new sources of supply, the situation in North America is contrasted with the very different forces impacting LNG prices in Europe. Finally, the article surveys the largest and most rapidly changing global market, Asia, briefly evaluating each of the most important non-supply-demand factors to have reshaped LNG trade in recent years and their impact on price movement.