Global LNG production growth to be lower than anticipated
According to the report ‘Global LNG Industry to 2015 Investment Opportunities, Analysis and Forecasts of All Active and Planned Liquefaction and Regasification Terminals’, in 2008, global LNG liquefaction capacity stood at 209.65 million t. According to earlier estimates, global liquefaction capacity was slated to touch 414.84 million tpy by 2012. However, delay in nine liquefaction projects with a total capacity of 70.93 million tpy will bring down the anticipated average annual growth rate (AAGR) from 17.06% to 14.61% between 2008 and 2012.
Between 2008 and 2011, the growth rate of global regasification capacity will decline only moderately from 23.94% (earlier growth estimate) to 23.27%. The impact of the current financial crisis on regasification capacity growth will be less compared to liquefaction as the latter are far more expensive to build than regasification terminals. A typical regasification terminal construction costs around US$ 600 - US$ 700 million as compared with construction cost of a liquefaction terminal (with one liquefaction train of 5 - 7 million tpy) around US$ 5 - US$ 6 billion.
The global LNG shortage will become acute by 2015
The global LNG industry is heading towards a supply crunch by 2015. The supply surge of LNG due to decline in demand will be replaced by supply shortages post 2012, as demand picks up. According to the aforementioned report, assuming that all the LNG production plants worldwide commence operations as per schedule, the demand-supply gap will stand at more than 600 million t of LNG by 2012. The global regasification capacity, which is expected to be built without assured long-term LNG supply contracts will be 742.8 million tpy in 2015 whereas the available liquefaction capacity that can be contracted out will be 217.9 million tpy. This huge gap between the demand and the supply is clearly suggesting an acute shortage for LNG supply by 2015.
Floating storage and regasification units (FSRU) – a cost effective solution to drive LNG industry amidst global credit crunch
A major technological development in the LNG industry has been floating regasification and liquefaction terminals. The first Floating Storage and Regasification Unit (FSRU) has been the Golar Spirit, which started operations at Ceara LNG in Brazil in January, 2009. The new technology is now being used at over 15 LNG terminals planned across the globe, which are scheduled to commence operations by 2015. Floating liquefaction technology is also a prospective improvement in the LNG industry to develop stranded reserves at minimal cost.
Global LNG industry: shifting LNG trade patterns in the future
Global LNG trade patterns are likely to witness significant changes in the future. LNG demand is projected to increase rapidly as natural gas becomes a preferred fuel and the demand growth from emerging economies like China and India will be a major driver for the LNG market in the future.
Asia Pacific will be the largest LNG importing region by 2015 and India will replace Spain as one of the top five LNG importers - while China, Japan and South Korea will continue to be major importers. The US will witness rise in dependence on imported LNG. On the supply side, there will be a significant change in the top five exporting countries with Australia and Nigeria breaking into the top five while Indonesia and Algeria will move out. Russia and Iran are unlikely to develop significant liquefaction capabilities. These factors will lead to a significant change in the global LNG trade movements by 2015.
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