LNG: Powering the Future – A $106 billion market 2008-2012
Cost increases and political issues have hit the LNG industry and will impact near term investment. However, overall capital expenditure (Capex) is set to reach new highs over the 2008-2012 period. A total of $106 billion is projected to be spent on export terminals, LNG carriers and import terminals over the next five years. These are amongst the forecasts in a new report launched today by energy analysts Douglas-Westwood. Oil & Gas Manager Steve Robertson commented, “The outcome of our research and market modelling shows that project delays will create an expenditure profile that has significant year-on-year peaks and troughs, particularly since we allocate project expenditure to the year of start-up. However, the overall conclusion is that LNG remains a growth market and expenditure levels continue to follow an upward trend. Report author Lucy Miller explained, “Asia has the largest proportion of global LNG expenditure. Over the forecast period, the region accounts for 43% of the $106.8 billion of our global forecast. The Middle East region is the next most significant and together the top two regions account for 58% of total expenditure. Meanwhile, the limits of domestic gas production in North America and Western Europe are becoming clear and gas import demands are rising. Increasingly, LNG is a method of choice in satisfying growing gas demand in these regions. Following the success of the Terminals established in Nigeria and Trinidad & Tobago, the wave of new projects that has emerged demonstrate a potential for serious market growth over the next five years.” For the first time, Douglas-Westwood has segmented the projected Capex for liquefaction terminals and import terminals into key expenditure items. Analyst Ian Jones remarked, “For liquefaction terminals, the ‘Construction Services’ sector accounts for the biggest percentage of total Capex (24%) and is forecast to grow from $1 billion in 2007 to just under $3.8 billion in 2012. ‘LNG Storage Tanks’ and ‘Engineering and Procurement Services’ are the next largest sectors within this segment and are expected to collectively account for over $10.9 billion in the 2008-2012 period or 27% of total Capex.”
