p1-5_LNG 3 08/01/2020 15:44 Page 1 32 pages essential LNG news! January 2020 In this issue: China and India at centre of LNG 1 China and India at centre of LNG surge as output projections change surge as output projections change World Energy Outlook from the World Energy Outlook from the France-based body looks at sector out to 2040 France-based body looks at sector out to 2040 The United States produces more natural gas than the whole of the Middle East 4 Australian foundation over the period to 2040 and Iraq with LNG investor BHP mostly associated gas and Mozambique expects market to with vast new offshore discoveries emerge advance more than most as large gas producers from a low base. in energy sector The 785-page World Energy Outlook Commodities company analysis from the France-based International examines the corporate question of LNG attractiveness as an investment Energy Agency stated in its natural gas sector outlook for both LNG and pipeline 6 A round-up of latest gas that China’s needs will prevail on the consumption front. events, company and LNG dominates growth in the gas trade with Asia the leading customer (IEA) industry news Expansion For the Record The IEA says the massive expansion of Over the next two decades, global “LNG dominates growth in global gas natural gas production is having wide- demand for natural gas grows more than trade and technological and financial 15 Eastward movement ranging effects on the global liquefied four-times faster than demand for oil. innovations are making LNG more of gas prices means natural gas balance by underpinning “Natural gas sees broad-based growth accessible to a new generation of the transition of LNG major investments in new liquefaction across the energy economy, in contrast to importers,” said the IEA. disputes from Europe capacity despite low gas prices in both oil where growth is concentrated in parts “The combination of a growing spot to Asia Europe and Asia. of the transport sector (trucks, shipping market and more destination flexibility Analysis from London-based “China, India and other developing and aviation) and petrochemicals,” are accelerating a move toward market- international law firm Squire Asian markets account for most of the explained the IEA report. based pricing of LNG and away from Patton Boggs LLP increase in global gas trade to 2040,” said Developing Asian economies account oil-indexed pricing.” It added. the IEA. for half of the global growth in natural “In the Stated Policies Scenario, the 17 Alfa Laval Aalborg boiler The report added in the section gas demand and almost all of the increase share of ‘pure’ oil-indexed import technology offers an dedicated to natural gas that by 2040, in traded volumes. contracts in Asia declines from around 80 easier and safe path to China would be importing almost twice percent today to less than 20 percent in LNG propulsion as much LNG as the next largest Pipelines 2040,” according to the IEA. Company's Gas Combustion Unit importing country, India, and the share China overtook Japan as the largest gas- “There is significant uncertainty as to and services form a complete portfolio for boil-off gas safety of gas in China’s energy mix rises from importing country in 2018 and its imports the scale and durability of demand for 7 percent today to 13 percent by 2040. are projected to reach the level of the imported LNG in developing markets “By 2040, the average gas molecule entire European Union by 2040. around the world,” it said. 19 Mediterranean nations travels over 5,000 kilometres to reach LNG emerges as the preferred way of “LNG is a relatively high-cost widen their service consumers in developing Asian markets, moving gas over long distances, growing fuel; investment in liquefaction, offerings in re-loads, nearly twice as far as today,” added the by more than 3 percent per year through transportation and regasification adds a micro-liquefaction and report. to 2040. considerable premium to each delivered small-scale LNG In the natural gas sector both LNG Pipeline gas increases at a more gas molecule,” added the IEA. Terminal sector is on the development path in southern and pipeline gas consumption will modest rate of 1 percent per year, with Europe continue in China where it increased by the increase primarily due to a tripling of Associated gas 33 percent in the past two years. China’s pipeline imports. “Competition from other fuels and 20 World Carrier Fleet: This offsets declines in net pipeline technologies, whether in the form of US output imports into the EU in the latter half of coal or renewables, loom large in the Details of LNG vessels “The United States adds nearly 200 the projection period, as the region takes backdrop of buyer sentiment and billion cubic metres to global natural higher volumes of LNG. appetite to take volume or price risk,” 27 Tables of import and gas production by 2025, over half of “By 2040, Asia consumes one-quarter stated the report. export LNG terminals which is destined for export,” stated the of the world’s gas production, much of it In other areas such as associated gas - and plants worldwide IEA report. sourced from other regions,” said the IEA. a by-product of oil production – global p1-5_LNG 3 08/01/2020 15:44 Page 2 FORECASTS volumes reached 850 billion cubic metres, around 20 percent of the world’s gas journal output. Globally, only 75 percent of this gas is used by the industry or brought to market. “We estimate that 140 Bcm was flared and 60 Bcm released into the atmosphere, more than the annual LNG imports of The World’s Leading LNG publication Japan and China combined,” explained the IEA. Maritime Content Ltd “This significant source of emissions 2 Prospect Road represents 40 percent of the total indirect St Albans AL1 2AX emissions from global oil supply,” added United Kingdom There are a wide range of investment costs for LNG such as feed-gas and LNG the report. www. journal.com shipping. LNG project economics sets the marginal price of gas in several +44 (0)20 7253 2700 Natural gas also resulted in 33 percent markets, according to this graphic originated by the IEA fewer carbon-dioxide emissions on Publisher average than coal per unit of heat used in “The window of opportunity is bringing down costs in many areas, we Stuart Fryer the industry and buildings sectors, and 50 relatively narrow and clouded by ask how innovation might affect the Editor percent fewer emissions than coal per uncertainty about the lifecycle emissions outlook for LNG,” said the report. John McKay unit of electricity generated. intensity of LNG,” said the IEA. “We explored four issues: the costs of [email protected] Coal-to-gas switching can therefore “The IMO long-term strategy LNG supply; the way that LNG is Advertising provide “quick wins” for global emissions envisages an overall emissions reduction contracted; its environmental credentials; David Jeffries reductions. of at least half by 2050, compared with and the potential for demand-side Only Media Ltd Theoretically, up to 1.2 gigatonnes of 2008. In this case, the maximum amount innovation to unlock new markets,” added Tel: +44 (0) 208 150 5293 CO2 could be avoided using existing of emissions that could come from ships the IEA. [email protected] infrastructure in the power sector. using LNG in 2050 is estimated to be 290 Subscriptions Sales Manager million tonnes of CO2,” it added. Consideration Stephan Venter Power Since 2010, 80 percent of the growth has The report considered how natural gas Tel: + 44 (0) 7253 2700 “Doing so would bring down global power been concentrated in three key regions: contributed to energy transitions when it [email protected] sector emissions by nearly 10 percent. With the US, where the shale gas revolution is competes with, and substitutes for, more Production coal prices in 2019 in a $60-$80 per tonne in full swing; China, where economic polluting fuels, in particular coal. Vivian Chee range, most of this potential would require expansion and air quality concerns have “In the Current Policies Scenario, Tel: +44 (0) 20 8995 5540 gas prices below $4 per million British underpinned rapid growth; and the higher overall demand for energy pushes [email protected] thermal units (MMBtu),” said the report. Middle East, where gas is a gateway to up natural gas consumption: demand for “Such prices are below the long-run economic diversification from oil. gas in this scenario increases by 2 trillion marginal cost of delivering gas for many of cubic metres (Tcm) by 2040, a level 50 Subscription the world’s suppliers, implying the need for Key fuel percent higher than in 2018,” stated the additional policy support (in the form of “LNG is the key to more broad-based report. Print & online £655/€810/US$1050 carbon prices or regulatory intervention) to growth for in 2019 it was already a record “In the absence of further support for Online only £595/€795/US$950 realise these emissions savings,” it added. year for investment in new LNG supply, renewables or efficiency policies, gas See website for more details Near-term efforts introduced from even as regional spot gas prices have satisfies a third of total energy demand www.lngjournal.com January 2020 by member countries of the fallen to record lows,” said the report. growth, and more than any other energy [email protected] International Maritime Organization It asserted that the stage appeared to source,” it explained. hotline +44 (0)20 7253 2700 (IMO) to reduce sulfur emissions from be set for natural gas to thrive, at least in “The Middle East, North America and shipping may relative terms, over the coming decades.