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LNG sector to overcome COVID challenges, to show supply growth

Oil&Gas Materials 4 June 2021 10:23 (UTC +04:00)

BAKU, Azerbaijan, June 4

By Leman Zeynalova – Trend:

The growth of liquefied natural gas (LNG) is expected to stand at 5.8 percent in 2021, as it will overcome the COVID-related challenges, Trend reports with reference to Fitch Solutions.

The company expects LNG supply growth in every region, excluding Europe, due to a temporary hiatus in Russia’s export growth and the diversion of domestic supplies in Norway for LNG to pipelines.

“In other regions, some combination of rising domestic output and liquefaction capacity additions will support export growth, while subdued prices will help to stimulate gas demand and shoehorn LNG supplies into saturated energy markets. Base effects will flatter growth and the return of outed gas supplies and increased utilisation of legacy export terminals are a large part of the narrative. Meanwhile, new liquefaction capacity additions will be limited, including Corpus Christi T3 in the US, Portovaya in Russia and the de-bottlenecking of the Qalhat facility in Oman,” reads the report released by Fitch Solutions.

The company believes that over 2021-2025 the pace of growth will remain strong with an annual average of 6.2 percent, as the roll-off of projects in Australia is offset by rising supply in the US, Qatar and Russia.

“For the five years in total we forecast net global supply additions of 164.4bcm, or 35.2%. This is somewhat softer than the pace of growth seen over 2016-2020, which we estimate at 49.0%, or 154.0bcm. Nevertheless, it paints a healthy picture for supply.

The regional makeup of growth will shift markedly, as the role for Asia-Pacific declines. Supply growth in Australia is crumbling, as high cost structures, rising regulatory risks and feedstock constraints limit the appetite for new greenfield additions. A number of brownfield projects are under consideration, including Barossa, Browse, Scarborough and Waitsia, but these will largely be used to backfill existing capacity and extend project lifespans, rather than to boost output. Overall, we forecast net export growth of 10.2bcm (10.7 percent) over the next five years, down from 56.1bcm (141 percent) over 2016-2020. The only other APAC market that we forecast to see growth over this period is Malaysia, which is set to increase its supply by 8.8bcm (32.6 percent), supported by the recent start-up of 1.5mtpa PFLNG Dua and rising domestic gas production,” reads the report.

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Follow the author on Twitter: @Lyaman_Zeyn

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