A new report by IHS Markit suggests that 2019 was a record-shattering year for the LNG industry.
The report, entitled ‘2019: A Year of Records for LNG’ says that the numerous records are indicative of a sustained growth trend, with global LNG capacity expected to increase by more than 50% from 283 million tpy in 2015 to 437 tpy in 2020.
Michael Stoppard, Chief Strategist, global gas at IHS Markit, said: “The ongoing pace of new investment is especially noteworthy considering a market context of weak global prices […] not only did LNG grow at an unprecedented rate in 2019, but the industry also laid the foundations for continued strong growth into the middle of the decade.”
Key records set by the LNG industry in 2019 were:
- Record levels of new investment: final investment decisions (FIDs) for liquefaction projects were made at an extraordinary level of 70.4 million tpy - 40% higher than the previous all-time high reached in 2005 (50.4 million tpy). The US, Russia, and Mozambique each set individual highs for levels of annual FIDs.
- Record levels of FIDs without long-term contracts: some liquefaction FIDs were made either without long-term contracts or were underpinned by sales to affiliates. Such ‘affiliate marketing’ reached a record 43 million tpy. Affiliate marketing at this scale has not been common in the LNG industry. Historically, most projects have instead secured long-term offtake contracts prior to committing to investment. By choosing to proceed without third-party contracts, projects can be developed more rapidly.
- Record liquefaction project start-ups: new liquefaction start-ups amounted to 38.8 million tpy of capacity, narrowly surpassing the previous high set in 2009. Recent start-ups were concentrated in the US, Australia and Russia. The pace of project starts is expected to slow in 2020 to 28.6 million tpy of capacity. The US will continue to dominate in this area as it mostly completes its current wave of projects.
- New global supply leader: Australia surpassed Qatar as the top LNG exporter for 2019, reaching 80.2 million t relative to 72.5 million t in 2018. Australia is expected to extend its lead in 2020 and retain its position as top exporter until 2023, when the US is projected to become the largest LNG producer.
- Record European imports: Europe set records for imports each single month as well as for 2019 as a whole. Annual net imports totalled 87.2 million t, which exceeded the previous record of 65.5 million t set in 2011. Imports are expected to remain strong in 2020 due to additional new liquefaction supply coming to market. New supply in 2020 is expected to outpace Asian demand growth and therefore maintain sales into Europe.
- Record Chinese import: China overtook Japan as the world largest LNG importer for December 2019, with volumes for the month reaching 7.3 million t in comparison to Japan’s 6.9 million t. Even though Japan is expected to continue to be the world’s largest LNG importer on a total annual basis through 2022, 2019 marked the second year in a row of declining imports for the country, and continuing an overall downward trend since 2015. China entered its fourth year in a row of record LNG imports, increasing its LNG imports 13.4% on a year-over-year basis.
Additional Reference: IHS Markit 2019 LNG Trade Figures
LNG supply in 2019 totalled 373.0 million t, up 11.8% from 2018. The largest increases in LNG exports came from the US (37.7 million t total, up 15.2 million t), Russia (30.2 million t total, up 10.1 million t) and Australia (80.2 million t total, up 7.7 million t).1
Net LNG imports reached 358.8 million t in 2019, up 40.5 million t from 2018. Regionally, LNG imports2 grew the most into Europe, totalling 87.2 million t relative to 49.9 million t in 2018. For individual countries, the UK registered the largest growth (13.3 million t total, up 8.1 million t), followed by France (16.3 million t total, up 7.8 million t), and China (62.4 million t total, up 7.4 million t).
Japan remained the largest LNG importer, receiving 77.5 million t in 2019. However, this was a decline from 83.2 million t in 2018, making Japan the market with the largest decrease in LNG imports in 2019. China remained the second largest importer over the entire year. South Korea remained the third largest importer in 2019, with 41.0 million t, however it also had the second largest decline relative to 2018 (down 3.5 million t).
- Supply figures are LNG production and loaded volumes. These are higher than delivered or import volumes because of LNG used of lost in transit.
- All import figures are net imports, with reloads excluded.
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