IGU: global LNG trade hits new peak, set for further growth

Global liquefied natural gas (LNG) trade in 2016 reached a record 258 million tonnes – an increase of 5% from the year before, and the largest ever year for LNG trade, according to the International Gas Union.

This increase is particularly noticeable when compared with the average 0.5% growth rate of the previous four years, IGU said in its 2017 World LNG Report issued on Wednesday.

This jump can primarily be attributed to a significant increase in new supply, due largely to the start of exports from the US Gulf of Mexico, as well as the start of commercial operations in Australia Pacific LNG, among others.

There was also significant increase in demand as LNG finds a role as a fuel of choice in new markets, the report said.

The most pronounced increase in demand comes from Asian markets, with China’s LNG consumption increasing dramatically by roughly 35% to 27 million tonnes per annum (MTPA).

On the flip-side, some markets – including Japan and South Korea as the two largest – have shown signs of satiation as other forms of energy come to the fore, in part showing the flexible value of LNG as a fuel source, according to the report.

This was particularly prevalent in Brazil, where a resurgence in hydro power has reduced demand for LNG by 80%.

The latter half of 2016 saw Asian and spot LNG prices reach $9.95 per million British thermal units (MMBtu) by February 2017, due to disruptions to supply and cold winter temperatures, IGU said in the report sponsored by Chevron.

This followed a dip in price in the first half of the year to $4.05 MMBtu, primarly due to supply outstripping demand, generating an average Northeast Asian spot price for 2016 of $5.52 MMBtu. The UK National Balancing Point (NBP) finished 2016 at $5.44 MMBtu, it said.

In 2016 global liquefaction capacity reached 339.7 MTPA – building on the 2015 measurement of 301.5 MTPA and growing at a consistent rate, according to the report.

This growth includes new projects such as Sabine Pass LNG, as well as Gorgon LNG and Australia Pacific LNG.

Global liquefaction capacity is expected to grow significantly over the next few years, with 114.6 MTPA of capacity under construction as of January 2017, it said.

According to the report, LNG continues to play an essential role in the marine shipping sector – with 31 newbuilds delivered from shipyards to the LNG shipping fleet in 2016.

This constitutes an increase of 7% compared to 2015.

“The IGU’s most recent report on Enabling Clean Marine Transport emphasises the monumental impact switching to LNG fuel can have on emissions generated by shipping, with one tanker on 3% bunker fuel producing as much in emissions as 50 million diesel-fuelled cars,” the report said.

LNG trade set for further growth

Looking forward, supply is poised to increase again in 2017 as new plants and additional trains come online, largely in the Pacific Basin, IGU said in the report.

Major economies such as China and India, as well as new LNG importers such as Pakistan, Egypt, and Jordan, will continue to support fundamental-driven demand.

“The looser LNG supply/demand balance will manifest additional deliveries into European markets with ample infrastructure, such as the UK, France, and Spain,” the report said.

Another developing trend will be the continued push by developers to locate small pockets of demand, which although individually small could amount to substantial volumes in aggregate, it added.

 

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