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        Changes in the Asian Natural Gas Market and Their Effects

        Choi, Jea-Seoung 충남대학교 경영경제연구소 2002 경영경제연구 Vol.25 No.1

        Natural gas in North America and Western Europe has been used as one of the main energy sources since the middle of the 20th century. In the 1990s, the role of gas had further grown along with enhanced environmental regulations. As a result, gas markets now are fairly well developed in the two continents and thus gas is being traded quite easily like other commodities. Natural gas in Asia, however, is at its primitive stage compared to the other two markets, since the market is not well-integrated and harmonized due to long distance between suppliers and consumers. This made the Asian gas market LNG-dominant and thus the most rigio gas market in the world. Traditionally, the Asian gas market has been sellers-oriented, but is recently shifting towards buyers-oriented. In other words, rigid, long-term contract-based gas business is changing to more competitive and flexible shape. Major changes affecting the Asian gas market are as follows. The first change is that orders of LNG carrier building have greatly increased since 1999. The second change is that movement towards liberalization in electricity and gas markets in Asia is on going. The third change is that LNG export capacity has expanded at a speed much faster than that of demand increase. The last change is that several new gas projects are about to emerge in the Northeast Asian region. The four changes are expected to affect the rigid Asian gas market to transform to more flexible, competitive, and efficient one.

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