Where will all the LNG go?

Lee Nichols's picture
Lee Nichols, Editor/Associate Publisher, Hydrocarbon Processing
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In less than two years, the LNG marketplace has switched from a seller's market to a buyer's market. LNG buyers have gained more leverage due to a glut of liquefaction capacity and stagnant demand; spot and short-term purchases are gaining market share against long-term contracts; LNG buyers are demanding better pricing and flexibility clauses within their supply contracts.

The increase in natural gas usage has caused a surge in LNG trade over the past few years. Depending on the reports consulted, global LNG trade measured between 240 MMtpy and 244 MMtpy in 2014. In 2015, LNG trade expanded by approximately 3% to 250 MMtpy. BG Group forecasts that LNG demand will eclipse 400 MMtpy by 2025.

At present, global LNG liquefaction capacity is just over 300 MMtpy and growing at a substantial rate. Nearly 80% of new liquefaction capacity will be located in Australia and the US.

At present, the US is constructing its first wave of LNG export terminals. This LNG buildout includes the construction of 10 liquefaction trains, with a total LNG output of nearly 45 MMtpy. This constitutes a total capital investment of more than $42 B by the end of 2019. A second wave of US LNG export projects could add 30 MMtpy.

In total, the US has announced more than 30 LNG export terminal projects (image left). These projects equate to more than 330 MMtpy of LNG export capacity by 2030 and represent nearly $200 B in announced LNG export terminal construction over the next 15 years.

However, the US faces steep competition from other LNG-exporting powerhouses, such as Australia, which is expected to add 50 MMtpy of LNG export capacity by the end of the decade. This forecast includes projects such as Gorgon, Wheatstone, Prelude, Ichthys and others. The country is well on its way to becoming the largest LNG producer in the world.

As the data for the US and Australia indicates, future LNG supplies will not be a problem.

New LNG-importing nations have entered the market—including Egypt, Jordan and Pakistan—with other nations building import capacity. Will this incremental growth be enough to soak up all the LNG coming online over the next few years? Leave your comment below.

Image: The US has announced more than 30 LNG export terminal projects, which equates to more than 330 MMtpy of LNG export capacity by 2030. For the full article, please visit Gas Processing.

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