2019 Set To Be Stellar Year For LNG [LNG Condensed]
The LNG industry will see a sea change in the investment outlook in 2019. Projects that have been on the board for some time look likely to receive that all-important final investment decision (FID), unleashing a new wave of industry spending targeted at a growing supply deficit in the mid-2020s, driven primarily by Asian demand.
Confidence is building for good reason.
As covered in this edition of LNG Condensed, Chinese LNG demand is booming and forecast to remain strong through to the 2030s.
While certainly the most important country in the LNG universe in terms of growth, China is not the only shining star. India Oil Corpora tion’s HK Manchanda sees Indian regasification capacity jumping from 30mn mt/yr a year in 2018 to 61.5mn mt/yr by 2023. In Pakistan, the authorities forecast a 30mn mt/yr gas deficit by 2030 and the answer to this gap is – you guessed it – LNG.
These are huge markets which in per capita terms are in fact relatively light gas users. However, they all see gas as the fuel of the future. China and India are massive coal consumers and the quickest and cheapest way to counter air pollution and growing greenhouse gas emissions is to make the switch from coal to gas. In Pakistan, the aim is to switch out the use of fuel oil in power generation with cleaner, cheaper gas.
The potential gas demand in theory at least is as big as India and China’s coal industries, which are the two largest in the world.
In all three of these populous countries, gas transmission and distribution grids are being expanded and new import facilities built. In all three, even in China, domestic gas production cannot keep pace with demand, nor can pipe- line projects.
There are major projects on the table, but they take time, politics and finance to be built. In contrast, a floating storage and regasification unit can be in place in under two years.
Given this burgeoning demand scenario, LNG developers are beginning to rub their hands in anticipation. The supply gap in the early 2020s is widening at some pace, with many analysts now forecasting a global LNG supply deficit of about 65mn mt/yr by 2025.
The message is simple. If you want to be the company to fill it, you had better start building now.
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