IGU: Global Wholesale Gas Price Rises to Four-Year High in 2018
The average world wholesale gas price rose to a four year high of $4.38/mmBtu in 2018, according to a new report released by The International Gas Union (IGU) May 13.
Driven by raised oil prices, tightening spot markets and government policy, last year’s average global wholesale price was the highest since 2014, the IGU’s 2019 Wholesale Gas Price Survey reveals. The gain marks a consecutive year of recovery after prices weakened in 2015-16, despite the growth of LNG provoking rising gas on gas competition.
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The share of gas on gas competition rose by 0.5 percentage points between the 2017 and 2018 surveys to 47%, reflecting the increasing share of spot LNG cargoes in LNG imports and rapidly growing US consumption. That offset a declining share in pipeline imports, as a result of reduced European pipeline imports and increased China pipeline imports.
The oil price escalation share declined by a quarter of a percentage point to 19%, with the loss in LNG imports being partly offset by gains in pipeline imports and domestic production in China.
Meanwhile, 2018 saw the most significant change in LNG imports since IGU began releasing its surveys, driven by the continued rise in Henry-Hub-priced US LNG exports as well as a general rise in spot LNG cargoes. The share of spot LNG imports reached just over 30% of total LNG imports in 2018, amounting to some 126bn m3 – an increase of 65bn m3 since 2016, or 10.5 percentage points.
Gas on gas competition for LNG imports in the traded markets, mainly in Northwest Europe, added another 4.5% of total LNG imports. Gas on gas competition accounted for more than 50% of LNG imports into Europe in 2018 – compared to 33% in 2017.
Gas on gas competition in the China and Indian sub-continent rose from 24% to 30.5% and for the Asia Pacific importers (mainly Japan, Korea and Taiwan) from 18% to 24%. Despite the growth in LNG imports between 2017 and 2018 of some 22 bn m3 or 5.5%, the actual volume of oil price escalation imports declined for the first time ever.
Wholesale prices outside North America rose continuously between 2005 and 2014, declined in most regions in 2015 and 2016, before rebounding in 2017 and 2018 in almost all regions. This was mainly in Europe and Asia, as oil prices increased and spot markets tightened. Prices also increased in the more regulated regions such as Africa and the Middle East, as authorities continued policies to increase prices to more market or economic levels.