Center for Strategic Assessment and forecasts

Autonomous non-profit organization

Home / Economy and Finance / Markets: estimates and projections / Articles
Special vehicles open up new LNG markets
Material posted: Publication date: 16-03-2017
Infrastructure for the reception of floating regasification installations can be created in a few months

The rapid growth in the supply of liquefied natural gas (LNG) risks to oversaturate the world market in the next three years. This forces producers and traders to seek more flexible ways of fuel supply.

To help consumers from Asia to the UK to benefit from lower prices, LNG to increase market share can use floating regasification units (PGU) capable of delivering fuel directly to power plants and gas pipelines. These vessels played a key role in the opening of new LNG markets in the last five years, making it possible to supply, for example, in Egypt and Argentina without having to build expensive land-based LNG terminals.

After two years, the number PRGU should grow approximately 40% to 34, which should help open new markets and make LNG market is truly global. "The vast majority of new markets in recent years have been markets PRGU, says Hadi Halles, which manages the LNG trading at Trafigura. – The expected excess supply will only accelerate this trend."

Projected LNG supply will grow by 50% in 2015-2020, against a background of increasing export capacity in the United States, Australia and Russia. While major markets, particularly Japan and China, depend on terminals on land on which construction takes years and billions of dollars of infrastructure for receiving PRGU you can create in a few months. Such vessels can build for about $300 million or equip existing LNG tankers regasification plants. This spetsializiruyutsya Texas Excelerate Energy and Höegh LNG Norwegian.

In recent years PRGU allowed Argentina to Egypt, Pakistan and other countries are quickly becoming major importers of LNG to diversify its sources of supply. For example, Lithuania reduced its dependence on Russian gas. According to Wood Mackenzie, the import using PRGO over the past two years has more than doubled, and now accounts for 15% of LNG supply in excess of 264 million tonnes per year. It is expected that both figures will continue to grow. "No one foresaw how significant will be demand from developing countries such as côte d'ivoire, South Africa and Panama, who are developing the capacity to import using PRGA" – says of Gals Farrer from Wood Mackenzie.

Use PRGO will be a key factor to increase the flexibility of supply, according to traders and analysts. For example, in some countries additional gas may be required only at certain times of the year for heating or ensure the operation of the air conditioning system. According to the analyst Genscape Ted Michael, is also PRGO can be used for temporary storage of excess supply, although at this time and is "steaming" about 3% of the gas in a month.

From Russia to Asia via the Arctic
After the trials, the first oil tanker-icebreaker LNG Christophe de Margerie, named in honor of the deceased in 2014, the CEO of Total, will open a new route for Russian gas exports. The ship cost $300 million, was built by South Korean Daewoo Shipbuilding and Marine Engineering and is owned by "Sovcomflot". In the summer months he can for 14-16 days to deliver gas from Yamal along the Arctic coast to China and Japan. In the winter it will transport the LNG along a shorter route to the Belgian Zeebrugge, where a conventional tanker will deliver gas to Asia through the Suez canal for 25 days.

Some countries, such as Egypt, discovered a huge gas field from its coast in the Mediterranean, imported LNG may be needed only for a few years, until they provide themselves. Energy companies and traders are ready to work more closely with countries where it might be impractical to Finance the construction of LNG terminals due to lack of funds or instability. "Now they are trying to create demand in emerging markets, so we are ready to cooperate with the less reliable customers," says Farrer from Wood Mackenzie.

But some in the industry remain cautious, warning that not all developing countries there are suitable ports with nearby power plants or pipelines for pumping gas into the country.

Orders for the construction PRGU a lot, but the number of available destinations for them remains limited, the analyst said a major commodity trader: "for Example, Bangladesh and Sri Lanka wanted to import LNG, but still it's not easy. Perhaps some shipbuilding companies are mistaken about the prospects of the market PRGO".

However, many market participants are betting on something that is inherent PRGO flexibility will play a key role in the fight against excess supply of LNG. "People believed that the barriers to entry to the LNG market will be high, but it grows and becomes more competitive, says Hellos from Trafigura. – Today is the most rapidly developing and promising commodities market".


Tags: assessment , oil

RELATED MATERIALS: Economy and Finance