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Douglas-Westwood: World LNG Market Forecast

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Hydrocarbon Engineering,

The LNG industry is undergoing a dramatic transformation. North American activity (the majority of which is committed spend) is driving a return to growth in global capital expenditure. A wave of new LNG carrier newbuilds will also be required to support a huge increase in traded base-load LNG volumes. Douglas-Westwood (DW) forecasts global LNG expenditure to total US$284 billion between 2017 and 2021. This represents a 50% growth compared with the preceding five year period.

Liquefaction terminals will remain the principal driver of expenditure with spend in the segment totalling US$192 billon. This will subsequently lead to a 42% increase in liquefaction capacity by the end of the forecast period. Despite challenging times for shipyards, with only four LNG carriers ordered in 2016 (YTD) – unit orders are expected to bounce back in the near term. Over 150 additional carriers yet to be ordered are likely to be required for additional export capacity coming onstream in the latter years of the forecast. Overall DW expects expenditure on LNG carriers will represent 19% of global expenditure.

As the final set of Australian LNG projects start operating in 2017, global LNG expenditure will be concentrated in North America. This regional swing in investment will result in the US and Canada accounting for 17% of global liquefaction capacity by 2021 – with Capex totalling US$105 billion, 36% of global expenditure over the forecast period. Of the six liquefaction terminals in the US, four of the facilities are currently under construction, with additional trains to be added before the end of the period. Beyond the forecast, some export terminals currently in the planning and approval stages will continue to support expenditure. DW has, however, taken a conservative view on additional projects, given the current economic climate, and expect many of the early stage projects not to progress past the initial planning/consent phase.

Over the long term, LNG demand will continue to grow, as countries seek to diversify their energy supply. It is expected that delays in committing to new nuclear capacity and limitations of renewable technology in base load applications will support continued newbuild of combined cycle gas power plants. This, in addition to declining local production in some key consumer nations, will be a compelling driver for continued investment in these capital intensive projects.

The World LNG Market Forecast 2017 - 2021 examines trends in the LNG market by region and facility type, supported by analysis, insight and industry consultation.

Adapted from press release by Rosalie Starling

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