BAKU, Azerbaijan, Dec.19
By Leman Zeynalova – Trend:
The year 2019 will be remembered as a record year for liquefied natural gas (LNG) Final Investment Decisions (FIDs), which crossed the $50 billion threshold for the first time ever, Arab Petroleum Investments Corporation said in its Gas Investment Outlook (2019-2023), Trend reports.
This milestone was driven mainly by North American projects’ adoption of equity offtake marketing structures, and supported by the addition of the Rovuma LNG (Mozambique) and Arctic LNG-2 (Russia), reads the report.
“The share of natural gas in the energy mix has risen steadily. In 2018, gas accounted for approximately 23 percent of global primary energy consumption. Over the same period, demand for gas grew by 4.6 percent, its highest jump since 2010, or about 45 percent of the total increase in primary energy consumption,” said the corporation.
This uptick is forecast to continue from 2019 to 2024 at an average rate of 1.6 percent annually as the build-up in global pipeline and LNG investments estimated at more than $200 billion continues into 2025, according to Arab Petroleum Investments Corporation.
“In addition to supply possibly outpacing demand until 2023, uneasy trade wars and geopolitical tensions are further complicating matters. Russia, which continues to defend its market share in Europe, delivered its first Yamal LNG cargo to China in July 2019, a mere five months after the United States’ last LNG cargo arrived in China in February 2019. In December, Russia, along with China, also inaugurated the 38 billion cubic meters per annum (bcma) Power of Siberia pipeline. The $400 billion, 30-year contract, is the biggest ever for Gazprom,” reads the report.
Amidst the ongoing supply glut, there is a growing risk of projects getting crowded out, said Arab Petroleum Investments Corporation.
“LNG prices are expected to remain under pressure until 2023 due to the abundance of spot LNG cargoes. Indeed, most global hubs and key indices have already witnessed drops in prices from 2018 to 2019, a trend expected to continue into 2020. For example, the annual average for the LNG Japan-Korea Marker (JKM), which stood over USD 10 per million British thermal unit (mmbtu) in 2018, dropped to less than USD 5/ mmbtu in Sep 2019. Similarly, Europe’s TTF (Title Transfer Facility) prices fell from approximately USD 7.5/mmbtu to less than USD 2.5/ mmbtu over that same period, and the same applies to the United States’ Henry Hub marker.”
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