ESSENTIAL FACTORS FOR IMPROVED MARKET ACCESS: PRICING, REGULATION, PARTNERSHIPS AND TECHNOLOGY

摘要

This paper will examine how regulation or the lack thereof in some instances has inhibited greater penetration of LNG in developing markets. LNG is urgently required in growth markets to (a) ensure availability of energy to support economic growth, (b) meet tightening environmental standards, and (c) plug dwindling domestic supply, etc. The competitiveness in relation to diesel is also clear. However, regulation often makes it easier for buyers to continue importing expensive liquid fuel from a national company instead of importing LNG, which would likely be procured under a different procedure. Further, the manner in which tariffs are computed (e.g. in the power sectors) makes the switch difficult. This could be on two accounts. First, tariffs are grossed up across different fuel types. Different power generators' economics will be hit differently depending on their fuel mix, hence not all parties may be incentivized to support a fuel switch. Second, regulators are not likely to vary tariff directly in relation to oil price making the residual price risk difficult for generators to bear in cases where fuel price is a pass through. Effective regulation is essential and tax may also have a big impact on LNG cost effectiveness - in some areas, LNG is taxed disadvantageously when compared to liquid fuels. Other elements of regulation that play a role relate to port tariffs. In failing to act quickly in ensuring a level playing field, some governments are losing significant sums in cost savings annually, throttling domestic output and negatively impacting the environment.