New report assesses offshore LNG market

Offshore staff

LONDON -- Infield Systems Ltd. forecasts that the capital expenditure on Floating Liquid Natural Gas (FLNG) and offshore regasification market will total $20.2 billion in the 2010-16 period, according to its Global Perspectives Offshore LNG Market Update Report to 2016. The majority of this capex is attributable to the more capital intensive FLNG projects. At present, there are no commercially operational offshore liquefaction projects. However, in recent years, a number of proposed FLNG projects have been pursued. These have included Shell’s Prelude project (Australia), Woodside’s Sunrise project (Australia/Timor Leste), and Petrobras’ Tupi pre-salt development offshore Brazil. Operators of these developments are all investigating the potential commercialization of gas reserves through FLNG technologies.

There are over 2,000 tcf of proven undeveloped gas reserves offshore in the world today. Infield has identified those reserves that are most prospective for FLNG developments and has grouped fields into prospective development groups. Groups considered most prospective in the short term are found in Tiers 1 and 2. Combined, these tiers consist of 75 development groups and are represented by over 300 fields, equating to over 340 tcf of gas reserves. Overall, the majority of Tier 1 & 2 potential lies in Australasia, followed by South East Asia, West Africa, and Latin America.

Unlike the FLNG market, there are a number of operational platforms in the offshore regasification market. This market alone is forecast to exceed $4.4 billion in the 2010-16 period. An increase in forecast capex over this period indicates the large number of proposed global offshore LNG regasification projects. This number has increased in recent years and while short-term bearish market dynamics may delay the implementation of some of these projects, the more positive view on gas demand in the longer term is likely to be a key driver in the development of regasification projects.

North America once represented the most prospective offshore regasification market. However, following the surge in shale gas production, combined with a fall in gas demand, many projects have been further delayed or canceled. At present, Asia represents the region of highest forecast capex associated with offshore regasification up until 2016. This will be driven by a number of proposed projects in Indonesia, Malaysia, Pakistan, Bangladesh, and India. In total, Asian-related capex represents 39% of total offshore regasification capex in the 2010-16 period.

Overall, there are good long-term fundamentals for the offshore LNG industry, with prospective FLNG and offshore regasification developments being identified in a number of locations at various water depths, Infield says. 


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