Natural gas has become a central subject of discussion within the energy market over the past several years. There are many reasons for this. First, the gas industry has experienced extraordinary success during the last decade. Horizontal drilling and the large-scale development of shale basins in the U.S. have become economically reasonable. Liquefied natural gas (LNG) technologies which have been around since the 1950s are now commercially viable. As a result, unlike other fossil fuels, natural gas is now widely used, and this usage continues to increase in most sectors of the modern economy: power generation, manufacturing, transportation, and more traditional areas, such as commercial and residential end-use consumption.
The LNG trade has expanded rapidly around the world, and interconnected networks of gas pipelines have and are still being developed inside and around Europe and Middle Asia. The natural gas industry is now facing a number of new challenges and opportunities related to both its demand and supply. On the demand side, the implementation of green energy policies will lead to a substantial increase in future gas demand. On the supply side, new natural gas resources are emerging around the world, mainly because of an increase in global LNG supply and the shale gas revolution. This unprecedented shift in the supply/demand balance for many countries is creating new market dynamics and altering gas pricing mechanisms. This article, the first in a two-part series that explores changes to the natural gas market, will provide a succinct overview of factors that will surely affect natural gas pricing mechanisms.
In July 2014′s indepth article, Vera Tikhomolova investigates the macro drivers in natural gas market while keeping the focus on macro drivers of supply.
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