Market Trends

Flame Conference 2024: IGU's Pivotal Global Gas Market Report

In a world grappling with energy transitions and seeking sustainable solutions, the International Gas Union (IGU) made significant headlines during their annual Flame Conference held in Amsterdam on April 23, 2024. The Flame Conference has always been a crucial event, and this year was no exception as it marked the release of the IGU's 2024 Global Wholesale Gas Price Survey report. The 16th report of its kind since its inception in 2005, the document provides an insightful analysis into the dynamics of the international gas markets.

The Rise of Spot LNG and Gas-on-Gas (GOG) Pricing

Profound shifts were evident in the nature of global gas trade. In 2023, there was a striking increase in the share of spot Liquified Natural Gas (LNG), which escalated sharply to 38%, up by 3% year-on-year. This expansion in spot LNG imports underpins the ongoing evolution of the gas markets towards increased maturity. Markets across the globe are increasingly anchoring gas prices to other gas prices (GOG), rather than to oil or other energy carriers.

It is important to recognize that this trend has been a decade in the making, reaching a milestone where just under half, precisely 49.7% of LNG imports, were priced on a GOG basis. China's demand for recovery and an upsurge in European spot LNG imports played pivotal roles in this incremental development. The significance of GOG is further underscored as the total volume of GOG priced gas, encompassing both LNG and pipelines, hit record highs at 57%.

Infographics Illustrating Market Dynamics

To facilitate greater understanding, the IGU released enlightening infographics accompanying the survey. These visual representations are crucial in breaking down complex data into more digestible and relatable content. They provide a snapshot of Global LNG Imports by Price Type and the Percentage of Spot Trade, reflecting the burgeoning dominance of spot pricing in the market.

The IGU also offers an infographic that provides a comparative analysis of Global Natural Gas Prices by Region, highlighting the significant regional variances in pricing. These illustrations have been made readily available for the public and are a testament to the IGU's commitment to transparency and education about the gas market.

The Changing Landscape of Global Gas Consumption

Shifting our focus to consumption patterns, half of global consumption has remained steady, slightly falling below the halfway mark due mainly to domestic policy adjustments in India and reduced consumption in parts of Europe. India moved away from international hub-based pricing to an oil-linked pricing mechanism—a strategic shift that bolstered the region's oil price escalation (OPE) to 36%.

Despite these regional fluctuations, the report underlines that vast sections of the Former Soviet Union, Middle East, and North Africa are still within the bounds of regulated pricing structures. Nevertheless, the perceptible increase in GOG priced imports could indicate an incremental move towards market-based pricing frameworks across these regions.

Regional Wholesale Prices: A Comparative Outlook

In 2023, the global gas market attempted to calibrate itself, navigating through a new precarious equilibrium. The average world price dialed back to $5.70 per MMBTU, regressing from the steep $9.48 average in 2022. Despite this fall, 2023's figure still ranks as the second-highest average price recorded in the survey's history. This view underscores the sustained and, at times, stark regional divergences in gas prices.

Europe struggled with the highest wholesale prices, reaching an average of $15.83 per MMBTU, primarily influenced by persistently high spot LNG prices. The Asia Pacific region encountered prices averaging $11.56, while Asian markets broadly endured prices around $9.16. In contrast, North America observed prices lower than both Latin America and Africa. Notably, the Former Soviet Union and the Middle East reported the lowest gas prices, as one might anticipate.

Emergent Trends in Asian LNG Market

The Asian market's role cannot be understated in the context of global gas market evolution. More competitively priced LNG entries have bolstered the presence of GOG pricing in Asia, moving the region further along the scale from predominantly non-market regulated pricing towards market-based structures. Although oil price escalation remains predominant, the discernible growth in the role of GOG is a clear indicator of Asia's progressing market maturity.

Asia's trajectory is particularly noteworthy when evaluated against the backdrop of its burgeoning consumption. In 2023, Asia was responsible for a staggering 40% of the global increment in gas consumption, underlining its crucial role in the future of gas markets, with its consumption accounting for 22% of the global total.

Insights from the IGU President

Madam Li Yalan, President of IGU, commented extensively on the report's findings. She highlighted the maturation and growing flexibility of the global gas market as positive signs from this year's survey. Indeed, the functioning and liquidity of the global gas markets are essential to the energy security and reliability of global energy systems. The survey results arrive amid an ongoing energy crisis and the precarious geopolitical risks that challenge a tight and delicate energy market.

About the Wholesale Gas Price Survey Report

The IGU's Wholesale Gas Price Survey Report is an exceptional resource, launched in 2005, that provides a comprehensive database documenting gas market developments, changes in gas price formation mechanisms, and wholesale gas prices. The 2024 Edition encompasses data covering a remarkable 98% of the total world natural gas consumption. Interested parties can download the report at the IGU's resource page: www.igu.org/resources.

The International Gas Union: Spearheading Global Gas Industry Representation

The International Gas Union stands as a pillar of the global gas industry, representing over 140 members from more than 80 countries. This accounts for a monumental 90% of the global gas market, covering every segment of the gas value chain. The IGU's role in organizing preeminent gas events, including the World Gas Conference (WGC), the International Gas Research Conference, and the World LNG conference series, is unparalleled. For more information regarding their endeavors and the industry at large, one can visit their website: www.igu.org.

IGU's Continued Commitment to the Gas Sector

To conclude, the International Gas Union's latest report is of critical importance for industry stakeholders, policymakers, and energy analysts alike. Ensuring the availability and accessibility of such rich offerings of data and insights is fundamental to the robust design of future energy strategies and policies.

The IGU remains a valuable hub for information, networking, and advocacy, fostering collaboration and knowledge exchange amongst gas industry experts worldwide. Their steadfast commitment to elevating the gas sector's role in the global energy landscape is evident in their meticulous research, comprehensive reporting, and their drive to convene the world’s leading gas events.

In line with their standard of transparency, the IGU has also provided their logo for branding and identification purposes, which can be accessed here: IGU Logo.

The findings from the 2024 Global Wholesale Gas Price Survey continue to be a subject of significant interest, offering clarity and direction during these challenging times for the energy sector. As the gas industry navigates through a multitude of complex scenarios, the insights from the IGU's report will likely remain an essential guide for the foreseeable future.

This detailed examination of the global gas market landscape, underscored by the latest IGU report, testifies to the dynamic transformation and adaptation of energy markets worldwide. As the Flame Conference concluded, the conversations, analysis, and forecasts emanating from this authoritative source will resonate through market discussions for the year ahead, shaping our understanding of an energy-dependent world in flux.

(Source: International Gas Union (IGU))