December 15, 2017

Low carbon energy demand driving down LNG price

The transition to low-carbon energy sources is contributing to a rapid reduction in the global price of liquefied natural gas (LNG) on the open market, says PwC in Navigating the price of natural gases, its recent report on LNG.

The report says: “A large part of the renewed interest in natural gas is driven by global environmental initiatives like the 2015 Paris Climate Conference. Because natural gas emits about 50% less CO gas than coal and about 30% less than oil, it is viewed as an attractive transition fuel, a placeholder until renewable options are perfected and become more cost-effective.”

The reduction in prices has been hard for LNG providers to stomach, even the larger international oil companies, which counted on gas and LNG for a large portion of their profits, according to PwC.

The report renders critical advice to companies to consider reducing costs. “The natural gas sector has already commenced focusing on capital expenditure reduction. Global investment levels in upstream gas are down by almost 40% from 2013 to 2016.”

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