This is an excerpt from Michael Stoppard's India CERAWeek presentation. Watch the full video.

One of the things that really struck me last year was the major role that natural gas had in our debates and our discussions about the future role of natural gas in the energy mix. One forecast that I will make with confidence is: that will be as true or even more true in our discussions this week over the next 24 and 48 hours. The role of natural gas in this energy transition.

This conversation will step back from the discussion about gas and India and look at developments in the global market and particularly in the LNG market to see how India interacts with those global developments.

You may recall that last year I suggested there was an abundance of natural gas in the world, and a strong competitive supply pressure to bring gas into the marketplace. But, I also pointed out that we were in a position of an 'investment impasse'. That, for all the talk of LNG, we had seen two lean years of very little investment in the LNG sector. That was part of a more general story about the capital constraints and capital discipline across the E&P sector, but there are also some very specific issues going on in the LNG market.

We forecast that that LNG investment impasse needed to be broken, must be broken, if we're to continue the forecast of a strong track for LNG demand growth. Well, I waited for 11 months, and I didn't see a lot of firm activity. Then, I took a very quick one-week vacation and just as I left we got the breakthrough! We saw a break in that LNG investment impasse of the last year.

We've seen two projects-one in the United States-a brownfield LNG train expansion and then the big project announced just a few weeks ago at the early part of October-the big Canadian project led by Shell and moving ahead.

It is our belief that these announcements keep LNG on the track of strong demand growth; that supply is set to keep at least on track with demand needs in the medium to longer term. We need, and we expect a further flurry of new investment LNG investment projects to move ahead. I think the Canada project, if I can just focus on that large one, is significant in many ways I will touch upon.

First, this is the largest LNG investment decision that has been made since 2013-14 million tons. More than 30 billion dollars of investment on this project depending on how you calculate it. Excitingly, it brings a whole new country, and a whole new node into the global LNG market. It's another piece in that jigsaw puzzle of getting a fully integrated global market.

It is a project that sits very much of the doorstep of Northeast Asia able to feed the world's largest LNG market, Japan, the world's third largest LNG market, South Korea, and the world's second largest and biggest growth market, Greater China, where it goes right into the heart of the heating market within the northern coastal part of China. So, this makes it very significant. It also, and I think this is interesting, has major implications as we think about pricing and contracting. It's the first Pacific Basin project, which is linked directly to pricing dynamics in the North American spot market linked directly to the AECO Hub in Canada and indirectly through to the Henry Hub and wider US complex.

And finally, it's suggested that this is an interesting project from the point of view of making a final investment decision without SPAs, Supply and Purchase Agreements long-term contracts in place. So, this is further evidence of a phenomenon that developers and producers are prepared to make balance sheet investment decisions to bring the LNG to market, even if there are a lack of customers prepared to sign long term contracts.

Listen to Michael's Stoppard full video on Global Gas & LNG Markets Outlook. Learn about our global LNG analytics and market outlook.

Posted 15 Nov 2018 by Michael Stoppard, Chief Strategist, Global Gas, IHS Markit

This is an excerpt from India CERAWeek and has been professionally transcribed as accurately as possible. Please note, some words and phrases may have been unintentionally excluded.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.