LNG Project Sanctions Set to Surge in 2019

Uncontracted demand by the world’s seven largest liquefied natural gas (LNG) buyers could increase four-fold to 80 million tonnes per annum (mtpa) by 2030, according to Wood Mackenzie.
“As China pushes on towards a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term,” Nicholas Browne, research director with Wood Mackenzie, said in a written statement emailed to Rigzone. “Other traditional major buyers, on the other hand, are facing legacy contract expiries and will be on the hunt for a mix of contracts to lower average costs and security in supply sources.”
Wood Mackenzie pointed out that the world’s top seven LNG buyers - accounting for more than one-half of the global LNG market – include:
- CNOOC
- CPC
- JERA
- KOGAS
- PetroChina
- Sinopec
- Tokyo Gas
According to Wood Mackenzie, the above Northeast Asian players have become increasingly active in global LNG contracting activity. The consultancy added that the buyers have announced more than 16 mtpa of contracts in 2018. In addition, it noted that the growth in contracting is happening at a time when supply growth is poised to surge.
Wood Mackenzie stated that it predicts 2019 could be a record year for LNG project sanctions, with more than 220 mtpa of gas targeting final investment decision (FID). A “bumper year beckons,” the firm stated. LNG projects that Wood Mackenzie considers “frontrunners” to reach FID include:
- The $27 billion Arctic LNG-2 project in Russia
- One or more projects in Mozambique
- Three U.S. projects
- “Expansion and backfill projects” in Australia and Papua New Guinea
As LNG buyers seek a variety of contracts to meet their different needs, LNG suppliers will need to ensure that they can address these changing needs, Wood Mackenzie cautioned. The firm noted that, in addition to price, LNG buyers will be sensitive to considerations such as contract flexibility, index, source diversification, upstream participation and seasonality.
“Market liberalization and uncertainty on longer-term demand in more mature markets, such as Japan, South Korea and Taiwan, will mean more room for spot and short-term purchases,” said Browne. “While oil indexation will continue to dominate markets due to familiarity and ability to hedge, Asian buyers should be more inclined towards hub indexation to boost diversity and enable sales into Europe.”
Looking ahead, Browne emphasized that 2019 should be unprecedented in terms of LNG liquefaction capacity sanctioned.
“Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market,” Browne concluded.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Shell Looking for TikTok Expert
- Earthstone in $627MM Delaware Basin Deal
- Permian Highway Pipeline in Expansion Project FID
- Top Headlines: USA Energy Sec Leads Meeting with 7 Major Oil Companies
- Market Says Boo! To OPEC+
- Calgary Stampede Returns With Oil Boom Vibe
- UAE Raises Fuel Prices Again
- Bureau Veritas Gets Services Deal On Shell UK Facilities
- Libya Crude Oil Exports Drop Sharply
- Major Licensing Rounds Coming Up In MSGBC Region
- USA Condemns Mortar Attacks on IKR Oil Infrastructure
- Sonatrach Makes Massive Gas Find In Sahara Desert
- Who Produced the Most Oil and Gas in 2021?
- Libya Says It May Suspend Oil Exports from Key Terminals
- G7 Weighs Russia Oil Price Cap
- First-Ever 8th Gen Drilling Juggernaut Delivered To Transocean
- Oil Prices Buck Recession Trend
- Exxon, Shell, CNOOC To Develop CCS Project In China
- Shell Chief Says World Heading for Turbulent Period
- More Oil Workers Being Trained to Operate in Permian
- USA Navy and Iran Corps Clash in Strait of Hormuz
- Oil Industry Responds to Biden Letter
- Top Headlines: USA Navy and Iran Corps Clash in Strait of Hormuz and More
- Oil Nosedives on Fed Inflation Actions
- Top Headlines: Oil Industry Responds to Biden Letter and More
- Too Early To Speculate on ExxonMobil Refinery Fire Cause
- Fitch Solutions Reveals Latest Oil Price Forecast
- ExxonMobil Made More Money Than God This Year
- Russian Oil Disappears as Tankers Go Dark
- OPEC+ Set to Remove All Production Curbs in August