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An Examination of the International Natural Gas Trade

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  • Ahmed El Hachemi Mazighi

Abstract

Recent developments in the liquefied natural gas (LNG) industry, particularly the ongoing projects of liquefaction and regasification and the increasing number of LNG‐carriers to be delivered in forthcoming years, have led some specialists to argue that LNG is today at the crossroads between regionalisation and globalisation. Other specialists think that, by 2010, LNG's share of the total international trade of natural gas will be predominant, compared with that of pipelines. All these assumptions are based on an examination of the duration of existing and ongoing international gas projects. The objective of our article is to examine the historical patterns of the international trade of natural gas and discuss the conditions for the globalisation of LNG trade. Using some statistical evidence on the international trade of natural gas from 1970 to 1997,1 we show the following. 1) A strong correlation exists between the international trade of gas by pipeline and LNG. Before LNG becomes predominant, we need a delinking of these two means of trading gas. 2) Globalisation of the LNG trade is not only linked to an increase in the relative share of the LNG trade; it is also and primarily linked to an increase in the inter‐area trade of LNG. 3) There is a negligible change in the pattern of inter‐area and intra‐area trade of natural gas, even during the late 1990s; this is due to the contracted nature of the LNG international trade that resulted in a stickiness of LNG routes. 4) The emergence of a global LNG market requires the satisfaction of four conditions: natural, economic, technical and institutional conditions — therefore, it will certainly take more than ten years to make LNG a global commodity.

Suggested Citation

  • Ahmed El Hachemi Mazighi, 2003. "An Examination of the International Natural Gas Trade," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 27(4), pages 313-329, December.
  • Handle: RePEc:bla:opecrv:v:27:y:2003:i:4:p:313-329
    DOI: 10.1111/j.0277-0180.2003.00073.x
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    Citations

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    Cited by:

    1. Olivier Massol & Stéphane Tchung-Ming, 2009. "Stratégies coopératives dans l'industrie du GNL : l'argument de la rationalisation est-il fondé ?," Working Papers hal-02469480, HAL.
    2. Srikant, Chethan D., 2019. "Impression management strategies to gain regulatory approval," Journal of Business Research, Elsevier, vol. 105(C), pages 136-153.
    3. Massol, Olivier & Tchung-Ming, Stéphane, 2010. "Cooperation among liquefied natural gas suppliers: Is rationalization the sole objective?," Energy Economics, Elsevier, vol. 32(4), pages 933-947, July.
    4. Brkic, Dejan, 2009. "Serbian gas sector in the spotlight of oil and gas agreement with Russia," Energy Policy, Elsevier, vol. 37(5), pages 1925-1938, May.
    5. Ahmed El Hachemi Mazighi, 2006. "The drivers behind the globalization of natural gas markets," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 30(2), pages 71-84, June.
    6. Whistance, Jarrett & Thompson, Wyatt, 2010. "How does increased corn-ethanol production affect US natural gas prices?," Energy Policy, Elsevier, vol. 38(5), pages 2315-2325, May.
    7. Geng, Jiang-Bo & Ji, Qiang & Fan, Ying, 2014. "A dynamic analysis on global natural gas trade network," Applied Energy, Elsevier, vol. 132(C), pages 23-33.

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