Point of departure
As 2015 comes to a close, the global gas industry finds itself at an inflection point. There is, of course, a cyclical downturn that will affect prices, investment and even company survival. But deep shocks have structural consequences, and there are five forces that could reshape the industry over the next decade.
Will contracts be re-written?
Shocks challenge long-term relationships, and periods of oversupply, in particular, disrupt sales and purchase contracts. The transition to hub-based pricing in North America, the United Kingdom and Continental Europe all started with oversupply. In the process, companies challenged and changed contracts through regulation, renegotiation, litigation and arbitration. The chatter about Petronet and RasGas renegotiating take-or-pay limits and pricing formulae are only the most public signs of a deeper change. There is no way that the industry can survive the next five years without contracts being re-written. The magnitude of the revisions will define precisely the world we will inhabit over the next decade.