The status of Liquefied natural gas (LNG) as a global commodity continues to gain traction, despite a slump in prices earlier in 2019. This is thanks to robust demand from Asian countries.
Japan remains the world’s biggest LNG importer, followed by China and South Korea. Demand is also reinforced via the growing focus on reducing reliance on coal and cutting carbon emissions, to enable countries to deliver on their nationally determined contributions according to the terms of the Paris Agreement.
There is also strong interest in the US, where “a second wave of LNG projects is coming through, with pent-up demand for LNG needed by 2022”. Lawyers reported working on many projects seeking to make final investment decisions to reach financial closing and a lot of work in relation to the “trading of LNG, with deliveries from the US into different parts of the world”. Practitioners recalled that “not long ago there were no LNG exports from the US, yet, within a year, the US will become the third largest exporter of LNG in the world”. The popularity in the US of LNG projects can be credited to its shale revolution and access to natural gas becoming relatively cheap; such key developments make it extremely competitive when it comes to building on the strength of LNG.
Sources also told us that Mozambique is likely to become one of the largest producers globally in the next five to 10 years, owing to the discovery of large offshore gas reserves in the north of the country. As a result, Japanese, Indian, Thai and Malaysian companies have become interested in Mozambique and “want a piece of the action when it comes to natural gas”, as one interviewee put it. Earlier this year, Energy firm Anadarko Petroleum Corp received approval for the construction of a $20 billion gas liquefaction and export terminal in – the largest single LNG project approved in Africa. The project has committed long-term supplies to utilities, major LNG portfolio holders and state companies around the world.
Further, it is expected that Asia and Europe will absorb the 35 million tonne increase in global LNG supply in 2019. Such increasing demand requires further investment and project commitments, reinforcing the “considerable amount of LNG work” already taking place in the legal market, and demonstrating that there will be plenty to keep lawyers busy in the coming years.