To meet the global natural gas consumption which is projected to rise in the long term under virtually all major scenarios—including the most aggressive low-carbon transition, a yearly infrastructure investment to the tune of $35-55 billion will be needed in the developing countries.
News sources reported that the Global Gas Report of 2018 released at the World Gas Conference by Snam, International Gas Union, and the Boston Consulting Group also forecasts project gas to overtake coal as the second leading source of global energy consumption by 2035, behind oil, growing from the current 22% to over 24% of the global energy mix by 2035.
In 2017 according to preliminary data, global gas consumption experienced its strongest growth in more than a decade at 3.7% year-over-year, more than double the average growth rate of the previous 5 years. Market liquidity and availability also increased, giving credit to the growing LNG market, up 48 billion cu m (bcm) or 12% in 2017 vs. an average of 1.6% during 2010-16.
The report was also said to have listed three major keys to push growth in the industry to include:
- Cost competitiveness, especially given that more than three quarters of forecast demand growth by 2040 comes from non-Organization for Economic Cooperation and Development regions.
- Supply security.
China was reported to have led the 2017 consumption growth, accounting for more than 30% of global gas growth and nearly half of global LNG demand growth. Consumption also continued to increase in Europe, up 30 bcm in 2017 (and 83 bcm since 2014), led by Italy (4 bcm, 6%), Germany (5 bcm, 6%), and the Netherlands (3 bcm, 10%). Russian production rose 50 bcm in 2017, meeting most of Europe’s consumption increase.
Report added that high LNG demand matched rapid supply growth, triggering also an increase in LNG prices. Average Asian spot LNG prices also reported to have increased $1.33/MMbtu from 2016 and sustained above $10/MMbtu through winter 2017-18, despite 36 bcm of new supply, 60% of which came from Australia and the US.
Global gas trade growth accelerated to 9% in 2017 after expanding by 5.5% in 2016, both up sharply from the 2010-15 average growth rate of 1.1%. LNG trade grew by 12% (48 bcm) in 2017, up from an average of 1.6%/year 2010-16.
LNG consumption in new importing markets continued to grow in 2017 as more countries like Thailand, Pakistan, and Jordan enter the fray of LNG importers, imports now increasing to 43 bcm in 2017 from 9 bcm in 2013, with at least five more expected to start imports by 2021.
Liquefaction capacity grew by 38 bcm in 2017: up 13 bcm in Australia, 12 bcm in the US, 7 bcm in Russia (Yamal), with the balance coming from the rest of the world, including Malaysia and Indonesia (4 bcm combined).
Pipeline gas trade grew to Europe, within North America, and to China, boosting total global growth by 8%, the report said. European trade rose 11% from 2016, with most supplies coming from Russia and Norway. Reporting that expanded interconnections between Canada, the US, and Mexico increased North American trade by 10 bcm. Improved pipeline connectivity with Central Asia increased pipeline trade into China by 8% (3 bcm).
Meanwhile Australia and the United States have been underlined as the major LNG producers to satisfy the future incremental Chinese demand for LNG.
This according to OGL was the view of Hans Kristian Danielsen, DNV GL Oil & Gas sales director and vice-president for marketing who spoke to Oil & Gas Journal at the last World Gas Conference in Washington, DC. And according to him, the Chinese demand growth that would not be met by these two supply sources would fall to Greenfield developments still in the US, Australia, and elsewhere.
OGL also reports Danielsen as mentioning both Cameron LNG in Hackberry, La., and Cheniere Energy’s Sabine Pass LNG plant as possible US sources of shipments to China. Cameron LNG’s liquefaction plant according to OGL currently under construction and scheduled to put its roughly 5 million-tonne/year Train 1 into service by yearend 2019, will have a total export capacity of 14.95 million tpy (2.1 bcfd of natural gas) from its first three trains.
Adding that a planned two-train expansion which had already received necessary authorizations from both the US Federal Energy Regulatory Commission, FERC and the Department of Energy, led by Cameron partners – Sempra LNG & Midstream, Mitsui & Co., Mitsubishi Corp., Engie and NYK Line according to this news source would increase capacity to 24.92 million tpy. The report however adds the agreement for expansion is still tepid.
Reporting that the Sabine Pass LNG has four trains in operation and expects Train 5 to enter service in second-quarter 2019, with the sixth train underway although no timeline. Each train has a 4.5 million-tpy capacity, totaling an eventual 27 million tpy.
OGL further reported that Cheniere has also made a final investment decision on Train 3 at its Corpus Christi, Tex., liquefaction project, adding 4.5 million tpy to an already planned 9 million-tpy site. Trains 1 and 2 are expected to enter service in 2019. Again no timeline is in place for Train 3.