courtesy Höegh LNG

The pace of worldwide project approvals for liquefied natural gas, or LNG, looks set to continue apace with demand increasing some five percent per year, judging by numbers in oil company Total’s latest Mid-Year Review.

The numbers could spell relief for consumers and wall off a potential political backlash against oil companies in the coming year.

Constraints on the pace of development for liquefaction projects — as in politics and the price of new facilities — are understood to be offset by Asian gas prices all but pinned, as in Europe, to the price of oil. Asian gas prices are still higher than European gas prices, judging by the Paris-based oil company’s charts.

In Europe, meanwhile, winter gas prices are predicted to be 60 percent to 80 percent higher than a year ago despite recent gas pipelines opening to Britain from the Continent and from Norway.

According to a report by Cambridge Energy Research Associates this summer, gas prices will remain linked to oil for the foreseeable future, so the standard six-month purchase contract for gas virtually ensures pain for ordinary people just as winter peaks in the Northern Hemisphere.

A quarter of Europeans are linked to a 40-year-old system of pegging gas prices to oil for long-term contracts, CERA said in its report.

“The one major factor that could disrupt the status quo is the delivery of large volumes of LNG to Europe,” the CERA report said, adding, “New import infrastructure, particularly in the United Kingdom, combined with additional volumes of LNG from Qatar may put pressure on the relationship that exists between buyers and the existing sellers of gas” as buyers reconsider their buying and the oil link.

ws@scandoil.com