LONDON Feb 20 Royal Dutch Shell, the
world's biggest liquefied natural gas (LNG) trader following its
takeover of BG Group last year, said new LNG customers that will
drive demand are looking for shorter and smaller contracts.
Shell expects much of new LNG demand to come from countries
that want to replace declining domestic gas production -- which
has already happened in Egypt and Pakistan -- and those
countries that are looking at LNG to complement pipeline and
domestically produced gas, like China or Morocco.
Shell said it sold LNG into six new markets in 2016,
compared with a typical annual rate of 2-3 new national buyers,
as countries like Egypt, Pakistan and Jordan chose to import
more gas to meet domestic consumption needs.
The new buyers typically need more flexibility in their gas
supplies due to uncertainty over demand evolution, meaning the
historical contract structure of large volumes sold in
multi-decade deals is changing.
"On average, term contracts are getting shorter and smaller
and that's in response to the introduction of new buyers to the
market who have more uncertainty in their market positions,"
Steve Hill, Shell's executive vice president for gas and energy
marketing and trading, told journalists on Monday.
New potential customers this year are Jamaica and Malta,
which have built floating storage LNG units, as well as Ivory
Coast, where Shell owns a small stake in a new LNG import
project, Hill said.
Shell's LNG sales rose 45 percent last year to 57.11 million
(Reporting by Karolin Schaps; Additional reporting by Ron
Bousso. Editing by Jane Merriman)