LNG Infrastructure Investments Required to Avoid Shortage

The LNG market is steadily growing as 42 countries are LNG importers while 20 are exporters, informs the Annual Report for 2019 by the International Group of LNG Importers (GIIGNL). Although, the growing number of importers may cause issues since there’s a risk that after 2025 suppliers will not be able to meet the growing global LNG demand. Action must be taken now to avoid this bleak prediction, and the answer lies with fresh investments in LNG infrastructure.

According to a survey by the international classification society DNV GL, 85% of LNG professionals think that more investments are necessary to be prepared for future demand. However, the current trend in the market is that of short-term contracts, where buyers, 72% in the DNV GL survey, are looking for more flexible, shorter and smaller deliveries. This, on the other hand, means that sellers lose the assurance provided by long-term financing for LNG infrastructure projects.

The saving grace could be floating LNG vessels (FLNG) that can create easy access to underwater gas fields, accelerating the development of gas resources in remote locations without heavy capital investment. They can be cost-efficiently converted from LNG tankers, a preferred method of 59% of LNG professionals, reports the survey. They provide fast and efficient operation, especially for small gas volumes – a perfect way to navigate the LNG market with widespread short-term & flexible contacts.

Despite that, some experts see stagnation in the FLNG sector growth. Due to the lack of new significant gas discoveries and market cost overruns of a number of FLNG projects, the investor interest is waning. While this doesn’t mean that such floating facilities will fall out of favour, it’s projected that FLNG will meet just around 5% of the future global LNG demand. This circles back to the dire need for investment for LNG infrastructure on a larger scale.

Alternatively, U.S. President Donald Trump suggested a way to avoid expensive new liquefaction infrastructure by transporting LNG by rail. It could open new markets with limited pipeline capacity and create new fuelling locations, for example, at ports to supply LNG as a marine fuel. However, there’s a concern that if the train’s tank car were to rupture and the LNG is exposed to air, it might trigger a fire that could devastate highly populated areas the railway passes through. While experts assure that it’s a very unlikely scenario, it still might not be the best solution for the lacking LNG infrastructure issue.

Luckily, the 4th International LNG Summit will gather natural gas executives, decision-makers, gas supplier & buyers for discussions and networking in Oslo on June 18th. It will help not only find solutions to meet the global LNG demand that is set to grow but will also provide opportunities to connect with investors and ensure a secure future for the LNG market. Tickets are available at www.lngsummit.org.