Douglas-Westwood:
World LNG Market Forecast 2016-2020
LNG – Key to Weaning the World off Fossil Fuels

Dec 22, 2015   + + +  Capital expenditure (Capex) on LNG facilities has risen substantially in recent years, mostly due to growth in the global economy which has been driving demand for natural gas. Douglas-Westwood (DW) forecasts that this trend is set to continue with total expenditure on global LNG facilities expected to reach $241bn between 2016 and 2020.

Research Team Leader and Assistant Editor, Hannah Lewendon, stated, “Emissions from the burning of fossil fuels has become an increasingly important considera­tion in recent decades. In light of environmental damage from en­ergy consumption, there has been movement towards the use of cleaner fuels. With natural gas only emitting half of the greenhouse gases of coal, it provides a mechanism for rapidly reducing emissions.

“With climate change having a far reach­ing implication to human health, delegates at the recently concluded COP21 climate change conference agreed on a low carbon roadmap. This will continue to support the shift towards gas as a cleaner alternative to oil & coal, with natural gas regarded as a “bridging fuel” to renewables in the future. Furthermore, tightening of environmental legislation will sensitise the transport and power generation industries in using LNG as an alternative fuel, in addi­tion to the price arbitrage effect.”

Author, Mark Adeosun concluded, “In the decades ahead, natural gas will play an increasingly significant role in meeting the world’s energy demand. The long-term potential of the LNG indus­try is evident as vast reserves of natural gas found in remote regions such as East Africa and the Arctic present considerable LNG opportunities for the future. In the short-term, a combination of low oil prices and a sharp fall in the Asian economic growth forecast has sent the LNG spot price tumbling fast, given that Asia is a vital region for demand growth. Low hydrocarbon prices remain a concern within the LNG market, as most LNG contracts are linked to oil prices.

“Therefore, the global LNG Capex outlook to 2020 will be characterised by a change in regional spend. The weaker projected expenditure in 2016 will be a result of a pause in commitments to new LNG projects. By far the largest proportion of the total expenditure will be attributed to liquefaction projects which account for 66% of spend over the forecast period. Import facilities will constitute 21% whilst spending on LNG carriers will represent 13% of total expenditure between 2016 and 2020.”

Source: Douglas-Westwood - www.douglas-westwood.com