WoodMac: FLNG industry growth facing headwind

WoodMac FLNG industry growth facing headwindIllustration purposes only (Image courtesy of Golar LNG)

Floating liquefied natural gas industry is expected to continue its growth in the future, however, it will be at a slower steadier pace of growth is likely as FLNG competes for capital and buyers in a busy LNG market.

According to the research and consultancy group Wood Mackenzie, the FLNG sector still faces numerous challenges.

Governments are concerned by the transfer of jobs to foreign shipyards during construction and to offshore workers during operation, which led to a push for onshore developments, such as Abadi (Indonesia), Greater Sunrise (Timor Leste/Australia) and Tanzania, WoodMac said.

Furthermore, the significant reduction in exploration expenditure since the oil price crash in 2014 has yielded few suitable new gas discoveries. The FID trend in the LNG industry more recently has favored high capacity US onshore projects with lower capital and operating costs.

FLNG projects face difficulties obtaining both the necessary partners, buyers and financing against such high capacity projects, Wood Mackenzie said.

A strong forerunner for FID, Ophir-led Fortuna FLNG appears to be out of luck, time and investors in the project. Prospective North American FLNG projects such as Delfin FLNG are struggling to attain the same interest as onshore projects despite the use of low-cost liquefaction vessels.

The lack of economy of scale is likely to limit FLNG projects to small scale and remote developments. This often requires the FLNG facility to be integrated with the upstream section of the project, resulting in projects of increasing complexity and cost, WoodMac notes.

The consultancy expects this trend to continue with high capacity projects in the US, Russia, Qatar and Mozambique looking to take FID. The lack of economy of scale is likely to limit FLNG projects to small scale and remote developments as it competes for buyers, financing and partners in a busy LNG marketplace.

However, FLNG has established itself as a credible development option and – with further experience and cost reduction – further projects may quickly appear in an otherwise quiet FLNG FID outlook.

In addition, the learnings of floating are being incorporated into a new development concept – platform based liquefaction as being looked by a number of projects.

Share this article

Follow LNG World News

Events>

<< Apr 2019 >>
MTWTFSS
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 1 2 3 4 5

Downstream 2019

Renowned as the most significant global meeting place for Downstream professionals…

read more >

Central and Eastern Europe SSLNG Forum

SSLNG projects are important for Central and Eastern Europe (CEE) because they offer opportunities for solving issues…

read more >

Klaipeda LNG Forum 2019

Klaipėda LNG forum 2019 organised by Klaipėda Science and Technology Park, Klaipėdos nafta and Embassy of the Netherlands will take place on the 15-16 May at Klaipėda Castle’s site hall, Lithuania.

read more >

Flame 2019

Flame is Europe’s largest gathering of midstream gas & LNG players, bringing together everyone who matters – from producers to utilities, purchasers, infrastructure providers, traders, regulators and policy makers.

 

More info

read more >