We have built a highly flexible LNG business, with a diverse portfolio of supply and market positions.
Traditionally, the LNG industry has been based on volumes sold under long-term, fixed point-to-point agreements.
We developed a different approach that offers our customers greater reliability and enhanced security of supply.
We have established market positions in the US and the UK, which can be supplied by either pipeline gas or LNG, as well as a portfolio of flexible LNG volumes sourced from north Africa, west Africa and the Caribbean. This combination allows us to divert our cargoes to markets worldwide to best match changing global demand conditions.
Applying this model allows us to adopt a portfolio approach to our LNG business.
Our customers are supplied from our global portfolio of LNG, with multiple production sources around the world, including Egypt, Trinidad and soon in Australia and the US. This means our customers are not tied to the output of a single LNG plant and it gives us the opportunity to maximise the value of the overall portfolio.
We can manage contractual terms such as delivery schedules, optimise logistics, in particular making our fleet of LNG ships run as efficiently as possible, and if the opportunity presents, purchase spot cargoes.
A key ingredient in this approach is our fleet of around 25 owned and leased LNG carriers – one of the largest in the world – which will grow as BG Group's LNG supply portfolio increases.
Optimising our portfolio is the focus of our Global Energy Marketing and Shipping (GEMS) team. The aim of the team is simple: to match the most competitive supply of gas, LNG, crude or LPG with the optimal market and then to ensure that we can deliver reliably and safely.
We see strong growth in natural gas, with the market expected to grow at an average of 2.4% a year over the period to 2025.
Residential demand for gas is driven by urbanisation and improving living standards. In Asia, urban centres are growing by almost four million people each month. Industrial demand in this region is due to strong economic growth in emerging markets as well as the increased availability of gas to replace higher cost liquid fuels. Across Asia, coal is still the dominant fuel for generating electricity. However, as increasingly prosperous urban populations demand cleaner air, we are seeing a shift to gas in the wealthier regions. There are also increases in demand other areas, such as transportation. Latest estimates suggest there are now over 60,000 heavy trucks in China alone running on LNG.
As a result of this strong growth in gas demand, the LNG trade is expected to grow to well over 400 mtpa by 2025, by almost all leading commentators. This is in comparison to a current trade of around 240 mtpa in 2012.
We are well positioned to meet this demand and to continue growing our LNG portfolio as we have potential projects under development in the four most prospective regions for major new LNG supply: the US Gulf coast, Canada’s west coast, East Africa, and Australia.
Our LNG heritage dates back to 1959.