The Impact of Lower Gas and Oil Prices on Global Gas and LNG Markets

A significant disruption to regional gas equilibria
The aftermath of warmer than normal 2013/2014 winters in Europe and Asia, evidence of slowing Asian LNG demand growth through 2014 and the collapse of the oil price in late 2014 has resulted in a painful ‘new normal’ for key players in the global gas system, specifically LNG project investors and Russia/Gazprom. At one level we can rationalise the slowdown in Asian LNG demand and stagnant European gas demand as having a direct causal impact on European hub and LNG spot prices. The oil price fall has in parallel brought oil-indexed gas and LNG contract price levels down to levels unimaginable just two years ago.