ATHENS, Greece – Energy markets depending on liquefied natural gas (LNG) to fuel the chain of their economic activities will have to brace for continued volatility and ‘high priced’ era of gas as this scenario in markets is seen to linger for a longer period of time, according to global players.

At the ongoing World LNG Summit here, Shell Executive Vice President Steve Hill primarily noted that “prices are still very high at historical basis,” emphasizing further that “price volatility is here to stay.”

Nevertheless, it was qualified that prices have somehow eased already compared to their historic highs in 2022, as an aftermath of the explosion of the Russia-Ukraine war around February of last year.

Essentially, Hill emphasized that energy markets have been trying to shield themselves from runaway LNG prices by underwriting long-term contracts – with some gas buyers signing up contracts that are as long as 27 years.

“The needs of the industry, the needs of producers and end-users continue to diverge. End-users have been batting for more flexibility,” he stressed.

Jonty Shepard, vice president for LNG Trading and Origination of UK-headquartered multinational firm BP echoed that the challenge moving forward will be for end-users to have the “ability to deal with those volatilities,” that will continue to torment markets in few more years down the road.

He similarly stated that if customers will enter into long-term contracts, the other key concern that they would need to ensure is “reliability in terms of long-term contracts – that if we sign contracts, they (producers) would be able to deliver.”

The BP executive further conveyed that when it comes to flexibility in the contract terms being sought – primarily by portfolio buyers, there are other conditions they have been opting for - including bid for renewables as replacement power.

“Portfolio buyers want complete flexibility for back-up power … the demand of customers has been changing due to energy transition. We need to make the value chain cleaner,” he asserted.

ADNOC Gas Senior Vice President for Marketing Rashid Al Mazrouel concurred that “costs are going up across the board – construction and shipping costs, but whether that would be reflected in prices is yet to be seen, because a market is a market.”

Nevertheless, the global industry players have not given specific timeframe yet on when they can see prices moderated or completely easing; with them qualifying that decarbonization targets being advanced in their chain of operations would be the next round of challenge that the industry will have to hurdle; as well as possible impact of the Israel-Palestine war – especially if some commodity shipping routes or borders will be affected.