FAVERSHAM, UK – Despite challenging market conditions, Douglas-Westwood forecasts global FLNG capex to total $41.6 billion between 2016 and 2022. This is an increase of 264% compared to $11.4 billion between 2011 and 2015.
While the protracted oil price downturn has impacted the sanctioning of capital intensive liquefaction units over the last 24 months, the need to move toward cleaner sources of energy and diversify gas supply has stimulated the floating regasification market. The analyst expects more than 14 countries will commission their first floating import unit over the forecast period.
According to the “World FLNG Market Forecast 2017-2022,” liquefaction vessels will account for about 59% of forecast expenditure, with the remaining 41% allocated to import and regasification terminals. Near-term growth in expenditure will be predominantly driven by a number of flagship liquefaction projects sanctioned prior to the oil price downturn.
Global expenditure is expected to peak in 2017 as the first wave of sanctioned projects come onstream. Reduced project sanctioning will likely impact the market toward the end of the decade – with expenditure forecast to decline significantly in 2019 – before stagnating over the 2019-2021 period.
Long-term prospects are positive, the analyst says, a marginal uptick in spending is expected in 2022, driven by the sanctioning of a second wave of capital intensive liquefaction projects.
Over the forecast period, Africa and Asia will be key areas for liquefaction and regasification units – with both regions accounting for 54% of total global expenditure. Spend in Australasia is set to decline post 2018 after the installation of the Prelude FLNG.
Despite near-term concerns, the long-term viability of FLNG technology is clear. In the decades ahead, DW points out natural gas will continue to play an increasingly important role in meeting global energy demand. Furthermore, the rising cost of onshore development terminals and the shorter lead times of floating units make the technology a viable option in the current market environment.
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