The emergence of floating liquefaction will drive a significant increase in total global Capex over the forecast period to 2019. While expenditure is expected to increase in the existing regasification market, the liquefaction sector is forecast to dwarf this, as Capex associated with a floating liquefaction terminal is more than triple that of a typical floating import terminal.
Douglas-Westwood (DW) forecast that expenditure is set to total $47.4 billion (bn) over the 2013-2019 period, with over $28bn spent on FLNG liquefaction and $19.1bn on import terminals.
Economic growth is driving electricity demand occurring in the developing world and Asia will be a focus region for both liquefaction and regasification terminals between 2013 and 2019, accounting for 35% of global Capex. Australasia will account for 22% of the market, largely due to a number of liquefaction projects. Latin America will represent 17% of global FLNG expenditure over the period, with projects involving both offshore liquefaction and regasification vessels.
The FLNG Market
In recent years it has become clear that the vast resources of both conventional and unconventional natural gas will see it dominate the energy mix over the next century as these reserves are exploited and brought into production. The drive to develop is coming from a substitution effect as a result of high oil prices and a move away from the use of both coal and nuclear energy.
Whilst there remains considerable uncertainty at a project-by-project level and caution is required in assessing longer-term markets, it is clear that the inherent complexity in floating LNG developments will be a key growth opportunity for equipment, engineering and services providers.
November 9, 2012