Record LNG capacity to get green light in 2019 amid strong demand

FE Team | Published: January 06, 2019 21:31:33

SINGAPORE, Jan 06 (Reuters): A record amount of liquefied natural gas (LNG) production is expected to get the green light in 2019 amid strong global demand, especially from China, analysts said.
A final investment decision (FID) could be taken on more than 60 million tonnes per annum of LNG capacity this year, well above the previous record of about 45 million tonnes in 2005 and triple last year's 21 million tonnes, Wood Mackenzie's research director for global gas and LNG, Giles Farrer, said.
The new capacity would bulk out the pipeline of gas set to come on stream in coming years, adding to the more than 320 million tonnes of LNG shipped globally in 2018, according to shipping data in Refinitiv's Eikon.
"If you have seen the potential demand for LNG, you have seen costs where they are now... that is motivating companies to push projects forward and motivating buyers to come forward to support some of these projects," Farrer said.
Frontrunners this year include the $27 billion Arctic LNG 2 project by Russia's Novatek, at least one project in Mozambique and three in the United States, Woodmac said in a report to its clients.
The three potential US projects are Qatar Petroleum's Golden Pass joint-venture with Exxon Mobil Corp and ConocoPhillips, Venture Global LNG's Calcasieu Pass project, and Cheniere Energy's Sabine Pass train 6, the consultancy said.
Canada's Woodfibre LNG project, developed by Singapore-based Pacific Oil and Gas, may also get the go-ahead in 2019, WoodMac said.
New projects typically take several years to develop, with many of those under consideration likely to be ready to ship gas in the early 2020s if approved.
A final investment decision on Golden Pass is expected by this month, while a decision on Sabine Pass 6 is expected in the first quarter and one on Calcasieu Pass is expected in the first half.
Amid a plethora of potential new production from Russia, Australia, East Africa and the United States, top 2018-LNG exporter Qatar is also expanding.
"Qatar is recognizing that it needs to capture demand for its LNG now, so it's bringing forward its projects," Farrer said.
"Now is a good time to invest. If you look at industry costs, they have really come off a cliff from 2 to 3 years ago. So if you're investing now, you're investing in the bottom of the cost cycle," said Farrer.