A strong recovery in expenditure on LNG facilities now underway worldwide driven by a growing demand for natural gas. The new eighth edition of Douglas-Westwood’s (DW) World LNG Market Forecast expects that global Capex will total nearly $228bn during the 2013-2017 period, an increase of 109% over the preceding five years.
The spending surge includes capital expenditure on base-load onshore and offshore fixed LNG liquefaction, LNG carriers and LNG regasification via both onshore and offshore fixed import terminals.
Report author, Michelle Gomez, commented, “Activity over the next five years is underpinned by huge financial commitments to both liquefaction projects and gas import facilities. The liquefaction developments will drive expenditure, with Australasia and North America playing a fundamental role in bringing new supply into the international market.
“Spend will peak in 2015 and decline slightly in 2016 and 2017. This is due to the surge of Australian LNG export projects reaching completion. The decline is, however, offset to some extent by significant growth in most other regions, particularly Eastern Europe & FSU, Africa and Asia. Liquefaction developments will contribute $143bn (63%) of forecast Capex. Import terminals’ spend will grow and total $50bn (22%). Gas carrier expenditure will increase at a CAGR of 25% and total $35bn (15% of forecast Capex.)”
Steve Robertson, DW Director, commented, “DW expect continued change in the focus areas for LNG export projects. While the Middle East remains one of the top exporters, the region will see very little expenditure within the forecast period. Australian spend however, will surge, peak and start to decline somewhat.
“As in many other sectors of the oil & gas industry, reducing the costs of LNG projects remains a major challenge. However, beyond the 2017 time frame of DW’s forecasts, significant potential for major growth in LNG capital expenditure can be seen, due to the large discoveries in East Africa and Eastern Mediterranean, together with increased focus on exports of US shale gas. Furthermore, the considerable potential reserves of the arctic offer a longer-term potential”