About the Project KAPSARC is analyzing the shifting dynamics of the global gas markets. Global gas markets have turned upside down during the past five years: North America has emerged as a large potential future LNG exporter while gas demand growth has been slowing down as natural gas gets squeezed between coal and renewables. While the coming years will witness the fastest LNG export capacity expansion ever seen, many questions are raised on the next generation of LNG supply, the impact of low oil and gas prices on supply and demand patterns and how pricing and contractual structure may be affected by both the arrival of U.S. LNG on global gas markets and the desire of Asian buyers for cheaper gas. Key Points Substantial changes to global liquefied natural gas (LNG) markets, including the move toward the creation of an Asian trading hub, more flexibility through an increase of spot and short-term trade, liberalization in key Asian markets, emergence of new players and current oversupply, call for better access to existing regasification terminals, which does not hamper the development of new infrastructure. Around 420 million tons per annum (mtpa) or 54 percent of global regasification capacity offers, in theory, some sort of third-party access (TPA). However, this access happens rarely in practice outside of Europe. Many terminals in other regions don’t offer TPA due to a lack of gas market liberalization and control of LNG terminals by incumbents Access to LNG terminals may prove to be a cornerstone of successful liberalization policies in Asia given the key role of LNG as a source of gas supply.

Regulators could opt for full or partial TPA or to implement an effective secondary market for TPA-exempted terminals to prevent capacity hoarding and minimize contractual congestions. Access to infrastructure – both pipeline and LNG import capacity – is a key factor for the establishment of a functioning trading hub. This goes hand-in-hand with initiatives to get rid of final destination clauses.