As analysts predict LNG supply crunch in 2023, TechnipFMC looks ahead to another busy year [Promoted]
Analysts predict an easing of the LNG market this year as new supplies come onstream but caution there will be a substantial tightening post-2022 unless a slate of new LNG projects take final investment decision this year.
“The global market for LNG is geared for substantial supply growth this year, mirroring a major increase in US liquefaction capacity,” says Carlos Torres Diaz, Oslo-based Rystad Energy’s head of gas market research. He expects global LNG production to rise 11 per cent to 350 million tonnes per annum (tpa) in 2019 and says Asia’s appetite for LNG – while vast, with China, already the world’s largest gas importer, set to import around 87 Bcm of LNG this year, an increase of 21 per cent from 2018 – will be unlikely to consume all of the additional volumes.
This will, however, be a temporary reversal. “The market is expected to tighten again after 2022, meaning that investment decisions for new liquefaction projects are needed this year in order to satiate future demand,” says Torres-Diaz, who predicts a “substantial” tightening of the market in 2023. Projects that reach FID in 2019 would be operational in 2024 at the earliest, emphasizing the importance of investment decisions being made during the course of this year.
The good news is that those on the frontline of new LNG capacity report a healthy pipeline of forward activity. “We are currently experiencing a high level of study and tendering activity that is reminiscent of the period preceding previous waves of LNG investment in let’s say 2004 and 2012,” says Philip Hagyard, Group Vice President, Gas Monetization, TechnipFMC. “We have no basis to disagree with the consensus view that there will be several major projects that will take FID this year.”
Yamal LNG a highlight
The company has some of the biggest LNG projects on its books. “The highlight for us last year was undoubtedly that the second and third train of Yamal LNG were completed ahead of schedule, and then started up very quickly,” says Hagyard. “They both then passed their performance tests within 2018.”
Other 2018 highlights include cutting first steel on the South Coral FLNG and the announcements made by Shell concerning Prelude FLNG, on which TechnipFMC is the main contractor. The company operates across the LNG chain, starting with subsea and surface wellhead equipment, production systems and platforms, gas plants, liquefaction facilities both onshore and offshore and reception or regas terminals, where it is a leader in LNG loading systems.
Delivering multiple projects on time, within budget
As a leading contractor, the key challenge on the horizon is managing the supply-side of the business in order to manage costs and access materials and resources for construction. “This requires a dialogue with our suppliers and subcontractors and careful planning,” says Dominique Gadelle, Vice-President, Gas Monetization, TechnipFMC, who will be sharing his expertise on Floating LNG at LNG2019, the world’s largest LNG event. “We are recruiting and organising ourselves as we have done in the past to meet peaks with several projects at once. In 2006 we built the six mega trains in Qatar, and at the same time Nigeria LNG Train 6 and the Yemen LNG project. In 2014 we had Yamal LNG, Shell Prelude FLNG, Petronas Satu FLNG and a couple of mid-scale LNG plants in China.”
Gadelle points out that modularisation can be a solution to optimising construction schedules. “Through the Yamal project, we have learnt that modularisation can be a viable alternative for construction and it is the way of reducing the construction manpower and the size of the construction sites,” says Gadelle. “FLNG also offers an alternate route to producing LNG.”
TechnipFMC in China
China is an important market for the group, which 30 years ago established a large operating centre in Shanghai. “China for us is also associated with the module yards that performed so well on Yamal LNG,” says Gadelle. “A number of projects that we are following have China as a destination market and certainly the high growth in demand here is one of the factors behind the number of potential FIDs this year.”
It’s one reason why the company is looking ahead to LNG2019, which opens on April 1st in Shanghai, the first time the global triennial event has been in China. “We are particularly looking forward to discussions about the new solutions that will bring down project cost, improve safety and energy efficiency and secure and improve schedule,” says Hagyard, also a member of the LNG2019 Steering Committee representing the International Institute of Refrigeration (IIR) and who will be moderating a plenary session on downstream LNG infrastructure. “Of course, we look forward to hearing the views of our clients and industry observers about where the LNG market is going as well, but as a very adaptable company we know that whatever route the industry takes we will be able to contribute.”
LNG2019 will be held 1-5 April 2019 at the Shanghai World Expo Exhibition and Convention Center (SWEECC). For more details or to book your place visit www.LNG2019.com