This year could be an exceptional year for LNG projects as a record number have been given the go-ahead globally.
Boosting the construction industry
This second wave of LNG projects is expected to provide further LNG supply which will hit the market in the next few years, but in the meantime, it is boosting the procurement, engineering and construction sectors in multiple countries.
It has been dubbed the LNG project boom, with US analysts Wood Mackenzie predicting that capital expenditure for LNG infrastructure will exceed $200 billion between 2019 and 2025.
Analysts also predict that there should be less inflation pressure with the second wave of LNG projects, as there is a far greater global spread than there was with the first.
Projects reaching final investment decision
Earlier in the year, Exxon and Qatar Petroleum reached a final investment decision (FID) to proceed with the development of the $10 billion Golden Pass project in Texas. This is one of a host of projects that have progressed lately – in June, Anadarko Petroleum announced FID on the 12.88 mtpa Area 1 Mozambique LNG development and Qatar Petroleum signed an $8 billion deal with Chevron Phillips to build a petrochemical plant on the Gulf Coast.
Canada is also benefitting from the boom with the C$40 billion proposed Coastal GasLink project from TC Energy Corp.
The EU has also approved 100 million EUR of funding for a 233.6 million EUR LNG terminal in Croatia. Unlike the first wave of projects, analysts from Wood McKenzie predict less cost overruns for Wave 2, as developers increasingly opt for modularisation and capex phasing.
This raft of development projects should help to satisfy the demand growth for LNG, as the transition to natural gas in heating and electricity generation continues. LNG met almost 11% of global energy demand last year, and its trade reached 316.5 million tonnes.