This year marks the one hundred years of LNG history – the first LNG research unit was started up back in 1917. As to commercial trade, it took a further 50 years before LNG commercial cargo was shipped from US Alaska to Japan in 1969.
Nowadays, LNG is the most prominent energy source, covering roughly 10% of global energy consumption out of 25% met by natural gas. Since 2000, LNG demand has risen at a rate of 4-5% per annum, twice as fast as natural gas demand – the fastest growing fossil fuel.
Furthermore, LNG trade is developing seven times faster than conventional pipeline trade, so that by the end of 2016, LNG represented about 32% of the international gas market. And it is expected that LNG trade will keep growing in the next decades, and by 2035 will constitute 50% of the global gas market.
Fast development of LNG trade is mainly attributed to the market’s flexibility – unlike pipelines, LNG supplies could be adjusted and redirected in accordance with seasonal fluctuations and regional demand.
Furthermore, the latest technology innovations not only make LNG easier and safer to transport, but they also enable the industry to develop stranded resources like offshore gas and coal bed methane that were not economically feasible before.
In 2016, LNG global trade hit a record 258 million tons per annum (mtpa), making an impressive 5% jump from the 245mtpa recorded in 2015. LNG was supplied by 18 countries.
The largest production increase (15mtpa) was achieved by Australia, with the total LNG export of 44.3mtpa in 2016. With the opening of Sabine Pass terminal, the US increased its LNG export by 2.5mtpa and reached 2.9mtpa, contributing 1.1% and occupying 16th place in global LNG export.
Looking ahead, the US has its ambitious goal to become the world’s third-largest LNG exporter by 2020. The intention was clearly demonstrated by the first LNG deliveries from US to Turkey in September 2016 and to Poland in June 2017. The response from the traditional gas exporters to the European market was a significant increase of pipeline gas supplies from Russia, Algeria and Norway in 2016 and further in 2017, though at the expense of dropped prices.
In 2016, Asia remained the world’s largest destination for LNG, importing 48.6mtpa, and Europe became the second biggest importing region, receiving 38.1mtpa of LNG.
Japan was a top importing country with 83.3mtpa (32.3% of global LNG import), and South Korea (13.1%) the second largest.
China and India demonstrated the biggest increase of LNG demand – 6.9mtpa and 4.5mtpa respectively. Two new countries, Jamaica and Colombia, started receiving liquefied gas increasing the total number of LNG-importing countries to nineteen.
Commissioning of new liquefaction facilities in Australia (Gordon LNG T1-2, GLNG 1-2 and Australia Pacific T1) and United States (Sabine pass T1-2) added 31.7mtpa to the world capacity, which reached 334mtpa by the end of 2016. While new production capacities continue to grow, capacity utilisation has slightly declined in recent years – from 84% in 2010 to 82% in 2016. This is mainly due to shortage of feedstock supply in Yemen, Angola and Nigeria caused by political and social unrest. However, the loss was nearly compensated by a higher production rate in few other countries.
LNG global trade in 2017 is expected to grow even faster than the previous year, increasing by 3% and will set a new record of 292.3mtpa.
There was 114.6mtpa capacity under construction as of January 2017, out of which 34.4mtpa will be coming online this year. These are also nine new liquefaction trains scheduled for commissioning in 2017: in Australia (Gordon T3, Wheatstone T1, Ichthys T1 and Prelude), Cameroon (Kribi FLNG), Malaysia (Petronas FLNG) and USA (Sabine Pass T3 &T4 and Cove Point).
With potential delays in some Australian projects and postponements until 2018, the nameplate capacity will almost double within 2017-18 and will reach 85mtpa. By this, Australia will become the owner of the largest LNG capacity in the world.
The six new projects (57.6mtpa) coming online in the US Gulf of Mexico and East Coast over the next five years will make US the leader in LNG incremental capacities.
LNG demand growth will mostly focus in the emerging markets, supported by positive economic and demographic increase, and a shift to a cleaner energy mix triggered by environmental awareness. In response to the market needs, new LNG receiving terminals in China, Ghana, India, South Korea and Pakistan, with a total capacity of 17.4mtpa, will be started in 2017.
Elena Shpinel is business development director of Euro Petroleum Consultants (EPC). EPC is a technical oil and gas consultancy with offices in Dubai, London, Moscow, Sofia and Kuala Lumpur. EPC also organises leading conferences, including ME-TECH WEEK 2018 – Middle East Technology Forum for Refining and Petrochemicals – which will take place in Dubai during 19-22 February. For further details please visit www.me-tech.biz