A rollercoaster ride for LNG

He explains that volatile market conditions over the last couple of years have left many LNG terminal plans languishing and investors becoming “quite rightly wary”. After all, in Europe the price of gas has been up against other very competitive energy sources, while in the US domestic shale gas supplies have simply stopped reliance on imports.

However, this may be about to change as more export plants come onstream from places as diverse as the US, Angola, Senegal, Australia and the Siberia-Arctic region. There is, he points out, some uncertainly on the future of the LNG market with both demand and supply “strongly expected to grow very fast”, and consequently pulling costs in both directions.

There’s also growing political will behind LNG terminals. While many people originally thought of a gas pipeline as being inherently more predictable than a shipping route, there has been a belated wakeup call that a pipeline can be held hostage by the countries it runs through. For example, the LNG terminal in Swinoujscie, Poland is being partly driven by a need to gain some independence from Russia’s exports. “Even if you want to keep a pipeline source, having some fuel independence gives a country a better bargaining position,” says Mr Bordet.

He adds, though, that there are two issues that will muddy the waters around any cost-benefit analysis. Firstly, it will take a while for the three, separate LNG markets to come together with any coherence: there’s huge differences between the cheap, shale-gas rich US market, the expensive, demand driven Far East, and Europe, somewhere in the middle – so seeing the future isn’t easy and there’s always a chance that gas prices will remain uncompetitive which will leave a port with an expensive headache.

Secondly, he explains that once a port decides to invest “none of its decisions are ever again going to be entirely just about the market” as it will be tied into a country’s energy strategy.