Capital expenditure (capex) on global LNG facilities will total $241 billion between 2016 and 2020, marking an increase of 34 per cent compared to the preceding five-year period, according to a new report from Douglas-Westwood (DW).

“Capex on LNG facilities has risen substantially in recent years, due mainly to the growth in the global economy which has been driving demand for natural gas,” said Hannah Lewendon, research team leader and assistant editor at DW, , a leading provider of market research and consulting services to the energy industry worldwide.

“By far the largest proportion of the total expenditure will be attributed to liquefaction projects, where the gas is cooled and condensed to a much smaller size. Global expenditure in this segment is forecast to total $160 billion over the next five years,” Lewendon added, commenting on the company’s report entitled “World LNG Market Forecast 2016-2020”.

“The global LNG capex outlook to 2020 is characterised by this regional change in focus, in addition to a weaker projected year for expenditure in 2016. This is a result of a pause in commitments to new LNG projects as demand growth in Asia has weakened and gas prices have slumped. Spending on LNG carriers is to be 12 per cent of the total expenditure. The vast majority of this expenditure is expected to be attributed to Asia, where increasingly experienced and low cost yards dominate the market,” Lewendon explained.

Mark Adeosun, author of the report, said: “The Australasian LNG construction boom looks to be coming to an end as the country prepares to enter a new production phase.”

“Massive investments in large LNG projects will result in seven new LNG plants becoming operational over the next few years. With commodity prices depressed, future LNG projects are uncertain, as those which are currently in Front End Engineering Design (FEED) are struggling to make economic sense in the low price environment.

“The US now has vast potential as an LNG exporter. However, the approval process for onshore projects remains slow and will limit the growth rate of LNG expenditure in the region over 2016-2020. In the US there are 20 LNG export terminals proposed for the future. Of this 20 proposed, 11 export terminals were originally planned for start-up between 2016 and 2020.

“However, DW has taken a conservative view and anticipates only six will be built over this period. DW expects North America to become a significant market player by the end of the forecast period,” he added. – TradeArabia News Service