Over the next five years, the liquified natural gas (LNG) industry will need to continuously adapt and evolve to navigate market changes and the advent of new technologies.
Demand for lower-carbon energy is set to soar as the global population skyrockets, developing economies grow, and calls for climate action increase. Given these factors, LNG is set to command a larger slice of the global energy market due to its lower-carbon footprint and unique ability to flexibly supply a diversity of market participants.
To meet rising demand, global liquefaction capacity will need to expand rapidly. However, fears remain that project financing could be a roadblock to growth. In recent years, LNG contracts have become increasingly shorter, with the average contract length for deals signed in 2017 falling to 6.7 years, compared with 11.5 years in 2016. Without the availability of long-term contracts, the construction of new liquefaction capacity may lag demand, laying the foundations for higher prices and tighter markets.
Nonetheless, the advent of new technologies, such as blockchain, machine learning, and big data analytics may help the LNG industry mitigate commercial risk. New technologies are set to seriously impact the LNG industry by accelerating business model transformation by working to streamline logistics, increase transparency, and reduce costs.
Take, for instance, blockchain. To optimise LNG trading, blockchain could offer an integrated digital trading infrastructure, which would facilitate the trading and tracking of cargo. Likewise, big data analytics could help reduce costs by optimising the timing of LNG shipping and reducing industrial energy consumption.
The possibilities of new technologies for LNG are limitless and are set to transform the industry’s working practices. With LNG predicted to encounter a host of market changes, the advent of technologies such as blockchain and big data will likely hold the key to future success.