ENTSOG Gas Regional Investment Plan South 2017 - Main Report

5.3 Prices

5.3.1 EVOLUTION OF SPOT LNG PRICES IN EUROPE AND ASIA As it has been described in TYNDP 2017, Supply chapter, LNG enables the connection of Europe to the global market and a large number of producing countries in the Middle East, the Atlantic (including the Mediterranean) and the Pacific basins. It gives access to reliable and diversified supply offering the shippers arbitrage opportunities at a global scale between different sources and regional markets.

Europe

Asia

South America

Figure 5.5: Main LNG importing areas (Source: TSO own elaboration)

In order to show the evolution of spot LNG prices in the different import basins, we have analysed the behavior of Europe, Asia and South America import LNG prices. Main facts: \\ Divergence of prices between Asian and European LNG markets was considerably high during 2014. For this reason, re-export of LNG vessels increased during this period reaching the maximum amount of LNG re-exported from Europe. \\ Since the beginning of 2015 a higher convergence of prices between LNG markets was achieved and in general terms, LNG prices went down. This fact is related to a combination of global LNG oversupply at production basins, with low gas overall demand. \\ The convergence of LNG prices continued in 2016. The positive trend in prices of all LNG markets during 2016 is driven by a combination of factors: higher LNG demand, higher Brent prices and some problems in LNG production. \\ The spread between prices from Asian and European LNG markets has increased progressively in the last quarter of 2016 due to several elements like higher demand and unavailability of some of the LNG production facilities.

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Gas Regional Investment Plan of the South Region 2017