The extraction of oil produces natural gas which, for a long period, was regarded as a relatively useless byproduct. Flaring was the most common way to get rid of this highly flammable substance. But in recent times, natural gas has become an important and essential part of global energy systems. East Asia and Europe are especially important markets because these regions lack significant reserves of their own and are able to absorb vast quantities due to the size of their economies. The global LNG market, however, is going through turbulent times as prices have dropped significantly because of a global supply glut.
Also, the price disparity between Asian and European markets has recently shifted. Europe’s excellent pipeline connectivity with producers in the north (Norway), East (Russia), and south (Algeria) has traditionally shielded it from large price swings on the LNG market. Asian markets such as Japan and Korea, however, are largely dependent on LNG. Therefore, customers in Asia would pay a higher price and therefore receive the bulk of the cargoes. The situation has changed considerably during this heating season.
