DW forecast that spending on global LNG facilities will read $US241 billion ($A340 billion) between 2016 and 2020 despite the current LNG glut, but little of that will head Australia’s way.
Due to the long lead times involved in LNG projects that have already been committed, spending will still increase 34% over the period 2010-2015 as thge past growth in the global economy has driven natural gas demand both for new consumption and fuel switching away from coal.
The growth in LNG demand is also being driven by the remoteness of many of the large oil reserves, as the ‘low-hanging fruit’ of easy access but low flow rate basins areas have been developed, and companies have been pushed into deeper water and higher costs plays.
DW said that while oilers have been forced to tackle more complex, more remote and more costly plays, gas in recent years has been easier to find and develop, with North American shale gas and CSG in Australia driving the expansion of greenfields projects in the Southern Hemisphere and brownfields development proposals in the US and Canada.
CSG has been responsible for about half of Australia’s new trains, all on the Queensland coastline, while in the US the shale gas is driving the transformation of import terminals into export terminals.
Previously stranded gas can now be exploited via LNG and floating LNG technology, having been aided by comparatively high gas prices in Asia, however the decline in global LNG spot prices and the lower oil price has most analysts believing the global gas market may not recover its equilibrium until 2020.
DW says the LNG construction boom looks to be coming to an end, with Prelude, Wheatstone and Gorgon likely to be the last new trains to be sanctioned in Australia, and only Woodside Petroleum’s Browse FLNG still in the game for a possible final investment decision.
DW estimates that two thirds of the expenditure between 2016 and 2022 will be attributed to liquefaction projects, one-fifth will be spent on new import terminals and 13% will bolster the global carrier fleet to actually move the gas around the world.
The firm expects Australian unconventional production, specifically CSG, is likely to rise to supply major export projects such as Australia Pacific LNG, Queensland Curtis LNG and Gladstone LNG, although the increases are unlikely to match the 400% increase of the period 2010-15.
DW expects that Australia will continue to dominate Asian trade because of its proximity to major traditional buyers such as Japan and South Korea, and emerging economies such as India and China, with LNG traded between the two regions will be at a discounted rate due to lower logistical costs.
The firm continues to believe that gas has long-term potential given the vast reserves of natural gas found in remote regions such as East Africa.
