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Research Announcement:

Moody's - North American natural gas going global on abundant supply, rising demand

21 March 2019

New York, March 21, 2019 --

- Ample supply is pushing into markets beyond the reach of North American pipelines

- Environmental regulations will bolster demand until renewable energies become more competitive

Abundant supply and stricter environmental regulations are set to benefit the North American natural gas industry as it goes global, Moody's Investors Service says in a new report. The report is the first in a series Moody's will publish in the coming months on the evolving natural gas business in North America, with future reports covering the major natural gas supply regions and related issues, such as infrastructure and exports.

"The North American natural gas industry is in the midst of transitioning from a regional industry towards a global one," said Amol Joshi, a Moody's Vice President. "Plentiful supply is pushing into new markets beyond the reach of North American pipelines, while stricter environmental regulations will initially favor natural gas until renewable energy technologies gradually become more competitive."

US natural gas supply has grown steadily as the result of the shale revolution, profoundly transforming the marketplace, Joshi says. At the same time, exports of liquefied natural gas and piped exports to Mexico are contributing to rising demand, which is beginning to catch up with abundant supply.

Demand for US natural gas is rising for power generation, bolstered by environmental regulations that promote or mandate the switch to natural gas from coal and other refined fuels that emit far more carbon, while industrial use is supportive. Lower prices on the back of increased supply have likewise boosted demand, with solid demand set to support prices over the long-term.

Nonetheless, the natural gas market isn't likely to resemble the global marketplace for oil anytime soon. Although natural gas is favored over coal, the global effort to curb greenhouse gas emissions implies significant risks to the global oil and gas industry. And while supply is set to meet demand as liquefaction facilities are rapidly developed, transportation costs and complex logistics likely will keep natural gas prices from truly optimizing in line with oil.

Subscribers can access this report, "Oil and Gas — North America: Natural gas going global amid rising demand, nimble supply, carbon transition," at: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1164140.

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Amol Joshi, CFA
VP-Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Steven Wood
MD-Corporate Finance
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

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