Baku, Azerbaijan, March 26. European gas and
LNG markets are expected to remain highly correlated, as long as
Europe remains very exposed to the LNG spot market, Aimie Parpia,
Global Head of Research at Six One Commodities, a global energy
trading merchant with offices in Stamford, CT, Houston, TX, and
Singapore, said, as she was addressing panel discussions during FT
Commodities Global Summit, Trend reports.
“I would say that the Asian demand story, from a structural
perspective, remains intact. We just haven’t tested it recently
because we have been pricing to contract demand as far as possible,
due to the European story that we’ve just heard. But the drivers
across the region, from South Asia, Southeast Asia to the Far East,
are similar to what they have always been. A combination of
declining domestic production, increased use of gas in the power
sector, coal retirements, delays to nuclear restarts, increased
grid connectivity, the list goes on. And across the region, there
has been a significant infrastructure build-out in order to support
that story. But this demand is only going to come to market in
tranches as prices correct with this additional supply that has
been mentioned from the sort of next wave of LNG projects,” she
said.
Parpia believes that there will need to see correction not only
in an absolute sense, but also in relation to the prices of other
fuels.
“As we see more supply, we also may see a shift in the kind of
demand-pull dynamic that we’re in now, where we need to compete, to
a more supply-push kind of dynamic. And there are many scenarios in
which you will need to test flexible markets such as China to see
how much exactly they can absorb. China and Europe have had this
kind of complementary relationship, where China has been the
balancing factor for when Europe has needed more or less cargoes.
And I think as long as that relationship exists, and Europe remains
very exposed to the LNG spot market, the European gas and LNG
markets will remain highly correlated.