Global law firm Ashurst recently undertook a study, “The Future of LNG and Natural Gas Infrastructure”, which collated the views of general counsel and executives across exploration, production, offtake customers and investors in the Asia-Pacific region with regards to liquefied natural gas (LNG) and natural gas.

Among the major findings from the study were that more non-traditional investors, “including cashed-up infrastructure funds”, are set to eye off LNG plants and associated facilities as an attractive investment in APAC. Non-traditional investors (such as infrastructure funds) are preparing to ramp up investment in LNG assets as traditional exploration and production companies seek to monetise hard assets and [reallocate] capital”, Ashurst said in a statement.

Among the infrastructure funds and private equity investors, the study found, the most attractive reasons for investing in gas and LNG infrastructure are long-term tolling arrangements and market outlook for LNG demand.

“To enable this, traditional players keen to monetise infrastructure assets may need to repackage them into a commercial model that allows for not only divestment, but also for stable infrastructure rates of return via service and tolling arrangements for the processing and handling of LNG and natural gas,” the firm said.

Moreover, it found that three in five respondents currently perceive varying degrees of disaggregation occurring across the industry in the next five to 10 years. The same number of respondents feel that infrastructure funds will likely be a key source of funding for future LNG and natural gas infrastructure development. Elsewhere, it found that a price on carbon would “provide greater certainty to investment planning”.

Reflecting on the study, Ashurst head of oil and gas in APAC and partner Peter Vaughan said: “The opportunity for this change is being created by a multitude of factors, including international oil companies seeking to monetise some of the huge sums invested in LNG processing facilities to free up capital for allocation into burgeoning new energies businesses or into other exploration and production plays.”

“Everywhere we look, the energy transition is impacting decisions. In the minds of our clients in the LNG business, the energy transition is here, it’s real. It’s just a matter how they can be in a position to capitalise on it,” he said.

Moreover, Mr Vaughan continued, “these expensive LNG assets” are held in complicated joint venture structures, and many of the joint ventures are ready to change as their original gas fields deplete and new gas is being courted under tolling arrangements, he said.

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“In this environment, some international oil and gas companies may be considering an exit, while some infrastructure players may be attracted to [long-term] tolling infrastructure as an investment,” he said.

Elsewhere, the study noted that the bigger players are broadening their reach through the energy sector, with respondents citing the “electrification” of the global energy system – driven by the uptake of renewables – as another force for change, Ashurst mused.

Jerome Doraisamy

Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.

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