The outbreak of COVID-19 has disrupted the logistics and supply chain industry, resulting in major losses to the transportation sector, including the shipping industry. Factors such as increasing demand for gas power generation and rising number of LNG-fueled fleet are expected to drive the global LNG market during the forecast period.
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However, LNG oversupply and trade tension is expected to hamper the market growth during the forecast period.
- The liquefaction sector is expected to be the largest market during the forecast pweriod, owing to the increasing investment by LNG exporting countries.
- A high number of LNG projects/development plans are expected to be proposed in upcoming years, underpinned by the growing LNG demand, leading to the creation of several opportunities for the market players in African region, thus, making an emerging LNG market.
- Asia-Pacific is expected to be the largest market during the forecast period, with majority of the demand coming from countries like China, Japan, etc.
Key Market Trends
Liquefaction Sector to Dominate the Market
- At the end of 2020, the total global liquefaction capacity reached around 454 MTPA in 22 countries, increasing by approximately 24 MTPA from 2019. In 2020, five new large-scale liquefaction trains, all located in the United States, exported their first LNG volumes 2020: Cameron LNG trains 2 and 3, Corpus Christi LNG Train 3, and Freeport LNG trains 2 and 3. Only one FID was taken in 2020, on the 3.25 MTPA Energía Costa Azul LNG project in Mexico, and about 108 MTPA of new liquefaction capacity was under construction globally at the end of 2020.
- As of 2020, the countries with the largest LNG operational liquefaction capacity were Australia, followed by Qatar, United States, Malaysia, Russia, Indonesia, and Algeria. Australia overtook Qatar as the market with the highest liquefaction capacity in 2019 and was also the largest market in 2020. Australia added 12.5 MTPA in 2019 due to the commissioning of Ichthys LNG T1-T2 and Prelude LNG. However, Qatar is expected to regain its position as the largest market in terms of liquefaction capacity by 2026-2027. In February 2021 Qatar reached FID on the North Field East Project (NFE), comprising of four mega LNG trains of 8 MTPA each, at an estimated cost of USD 28.75 billion. The 33 MTPA project is expected to start production in Q4 2025 and will raise Qatar’s LNG production to approximately 110 MTPA by late-2026 or early 2027.
- Further, significant capacity expansion in the United States was witnessed with 23.35 MTPA of liquefaction capacity added in 2019 and around 24 MTPA in 2020. This helped the United States to become the world’s third-largest LNG producer, overtaking Malaysia and Russia. As of 2020, the top three LNG exporting markets (Australia, Qatar, and the United States) represented close to 50% of global liquefaction capacity.
- Global liquefaction capacity is expected to almost triple if all proposed projects are realized compared to 2019. The majority ofthe proposed capacity additions come from North America (599.6 MTPA), with 350.5 MTPA located in the United States, 221.8 MTPA in Canada, and 27.4 MTPA in Mexico, followed by Africa (93.3 MTPA), Asia Pacific (72.4 MTPA) and the Middle East (93.3 MTPA).
- However, due to the negative impact of the COVID-19 pandemic, the global LNG exports fell by around 22% between January and June 2020 with countries such as the United States, Malaysia, Oman, Trinidad, Egypt, and Indonesia inducing supply curtailments. The second half of 2020 registered a significant recovery as LNG export volumes gained momentum with importing countries easing lockdowns and industrial activities returning to pre-COVID levels. According to IEA, between June 2020 and December 2020, the global LNG supply increased by 25%.
- Therefore, based on the above-mentioned factors, the liquefaction sector is expected to dominate the global LNG market during the forecast period.
Asia-Pacific to Dominate the Market
- Asia continues to be the leading importing region with a 71% share of global LNG imports, up from 69% in 2019. Asian LNG imports grew by 3.4% in 2020, reaching 254.4 MT. Imports rose in all Asian countries except Japan, Pakistan, Indonesia, Malaysia, and Singapore. Japan experienced the greatest decrease in LNG imports (-2.4 MT) which represented a fall of 3.2%. This happened notably due to lower LNG imports during the second quarter of 2020 following the lockdown measures which were implemented within the country and their downward impact on electricity consumption.
- However, LNG imports showed a progressive recovery from June onwards with a spike in December 2020 due to the exceptionally cold weather. Despite this, Japan remains the leading LNG importing country in the world with 74.4 MT or a 20.9% market share.
- China, being the second largest LNG importer in Asia-Pacific, experienced the greatest growth in terms of imported volumes (+7.2 MT or +11.7%), which was below its 2019 growth of 14%. The main surge of LNG imports took place during the second quarter of 2020, when LNG imports were favored over pipeline imports, because of lower spot LNG prices. China remains the second largest LNG importer globally, with 68.9 MT or a 19.3% market share up by almost 2% from its 2019 market share (17.4%).
- Furthermore, China, in a bid to meet growing gas demand, has been investing in LNG terminals. In June 2020, Guanghui commissioned Phase 3 of its LNG receiving terminal in Qidong, Jiangsuwhich, which increased the terminal’s receiving capacity to 3.0 MTPA. Phase 4 expansion works started in May 2020 and are scheduled to be completed by the end of 2022. The terminal will then have a 4 MTPA receiving capacity post completion of phase 4.
- Also, in 2020, the LNG spot prices in Japan during the end of the year (September – December 2020) kept on increasing due to the growing demand for gases for power generation during the winter months. The government plans to increase the storage and gasification capacity in order to curb the power shortage, which is likely to drive growth of the market being studied.
- Therefore, based on the above-mentioned factors, Asia-Pacific is expected to dominate the global LNG market during the forecast period.
The LNG market is fragmented. Some of the major players include Fluor Corporation, TechnipFMC, Bechtel Corporation, Royal Dutch Shell PLC, and Gasum AS.
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