The Profits and Promise of Global LNG
Energy Research Associates, December 2008, Pages: 260
The unprecedented volatility being observed in the world energy markets underscores the need for timely and in-depth analysis of the rapidly changing global LNG industry. For a long while, it had generally been assumed that LNG would comprise a continually expanding component of international gas trade. The challenge before analysts had been simply to estimate the pace of industry growth and predict who the major beneficiaries would be.
The events of the past year have called into question all the prevailing optimistic assumptions, and the expected growth of the industry is no longer at all ssured. Profound imbalances among the elements of the LNG production chain, including liquefaction, shipping and regasification capacity, have created severe bottlenecks that significantly compromise the smooth operation of projects.
The trend of declining infrastructure costs that had been the hallmark of, and driving force behind, much of the industry’s growth, has been reversed, and LNG is now facing a period of sharply accelerating price increases. Skilled, highly-specialized personnel that had been readily available in the early 2000s, are now in critically short supply.
Many of the industry’s larger traditional suppliers, such as Indonesia, Nigeria and Algeria, are facing an array of problems that threaten their ability reliably to supply existing customers, let alone allow development of new markets.
All of the above issues notwithstanding, unusual opportunities still remain for those industry participants who are adroit at recognizing and adapting to the new industry paradigm.
World LNG demand for the coming decade, and beyond, is expected to continue growing, although at a slower rate than the 7.7% per annum recorded over the past decade. Gas is likely to satisfy a large share of the emerging demand in China, India, and the Asia Pacific market.
Many new trade opportunities are developing in Asia that were not considered even speculative just one decade ago. China and India, which hold the promise of generating huge markets over the coming decade, have concluded major deals with Qatar, Australia and Algeria, and are negotiating projects with Nigeria, Russia and Oman, among others. Natural gas as an energy source in Asia in 2007 approximated 10.6% of total primary energy use — substantially lower than the world average of 23.7% — suggesting tremendous room for growth.
In Western Europe, natural gas activity is burgeoning, with new proposals being developed by France, Norway, Italy, Spain, Turkey and the UK. As the operating conditions of the industry become more problematic, there is growing room for negotiation in supply contracts. The smooth operation of a project is becoming more difficult to achieve and unreliable long-term trading partners are being shunted to the side while spot trade is encouraged.
This study is a comprehensive examination of the worldwide trade in LNG. The analysis is sharply focused in a business context with a careful examination of where, and how, profits are generated in the industry. The legal, financial, economic, and regulatory issues that define the industry are carefully analyzed. Industry models are constructed for 2010, 2020 and 2030, assuming alternative economic growth rates.
VOLUME I
EXECUTIVE SUMMARY
Components of Industrialized Nations’ Fuel Mix
World’s Rapidly Shrinking Oil Reserve Base
Growing Share of Natural Gas
Gas and Oil Pricing
Rise of Short-Term and Spot Trading
Western Reliance on Arab Oil
ECONOMIC CONSIDERATIONS
The Environment
Fossil Fuel Substitution
Re-emergence of Nuclear Energy
Developing Asian Markets
Security of Supply
International Cooperation
Cost of LNG Production and Shipping
Shrinking Resource Base
Decelerating Conservation
Balance of Payments Consideration
Growing Indigenous Gas Use
Geo-political Tensions
Threat of OPEC-like Gas Cartel
WORLD ENERGY MODEL
Slowing Global Economic Growth
Price Volatility and Demand Destruction
World Energy Demand
Regional Energy Issues
Prospects for Natural Gas
Prospects for Coal
Nuclear Energy Outlook
India and China: The Pivotal Countries
LNG INDUSTRY FORECASTS
LNG Trade Forecast by Trade Zone
Industry Time Line Trade Forecast (2008-2030)
Energy Profiles by Country
- U.S.
- Spain
- Qatar
- Japan
- Korea
- Taiwan
- Australia
- China
- India
- Brunei
- Indonesia
- Malaysia
- UK
- France
- Italy
- Russia
- Algeria
- Oman
- Egypt
- Nigeria
- Trinidad
VOLUME II
LNG INDUSTRY PROFILE
Current Trade
Project Descriptions
Future LNG Trade
Possible LNG Projects
Speculative Projects
MICRO ANALYSIS OF AN LNG PROJECT
Basic Economics
Liquefaction Plant Costs
Shipbuilding
Total Capital Requirements
LIQUEFACTION CAPACITY
Existing LNG Liquefaction Plants
Shortage of Liquefaction Capacity
Additional Liquefaction Requirements
LNG SHIPPING
LNG Fleet
Tonnage Requirements (2008-2015)
RECEIVING TERMINALS
Surplus of Worldwide Stock of Terminals
Planned Receiving Plants
Offshore Receiving Systems
Analysis of Potential Problems with Projection
Escalating Capital Costs
Global Shortage of Trained Personnel
Safety Issues
Unavailability of Capital Requirements
Barriers to Entry
TABLES and CHARTS
Global Natural Gas Reserves
Geographic Distribution of Oil and Gas Reserves
World Natural Gas Production and Consumption
Energy Use Growth Rates
Gas and Oil Prices
Worldwide Distribution of Gas Fields
World Nuclear Energy Consumption
Primary Energy Consumption
Energy: GDP Trends
World Gas Consumption by Economic Sector
LNG Book Promo:6x9 8/12/08 12:39 PM Page 8
Distribution of Global Oil and Gas Reserves
Geographic Distribution of Gas Demand
Consumption of Natural Gas for Electricity Generation
OPEC Oil and Gas Reserves
OPEC Production of Natural Gas
OECD Reliance on OPEC Oil and Gas
OECD Reliance on Russian Gas
D.O.E. Energy Outlook for 2010-2030
Energy Projections for Market Economies
World Energy Consumption by Type (2008-2030)
World Energy Consumption by Geographic Sector
China and India Energy Balance (2008-2030)
International Trade in Natural Gas (2007-2030)
LNG Trade by Region (2007-2030)
Potential LNG Sources<
Qatar LNG Infrastructure
History of LNG and Internationally Traded Gas Prices
Global LNG Netback Prices To Liquefaction Plants
Western Europe Gas Consumption
Projection of Japanese Energy Mix (2008-2030)
EC Production and Imports (1988-2030)
EC’s Energy Outlook (2005-2025)
Liquefaction/Regasification Capacity Ratio
Profile of Ships in Service by Project (June 2008)
Principal LNG Shipyards and Orders
Tonnage Requirements by Project
Number of Ships Likely to be Ordered (2008-2030)
Industry Capital Requirements by Activity
The Profits and Promise of Global LNGis a thorough and detailed two-volume study which should prove invaluable to anyone having an interest in the growth of the natural gas industry, including government agencies, equipment manufacturers, utilities, pipeline companies, regulatory bodies, and service companies.
The analysis is meticulously documented with over 150 tables and charts of supporting statistics. The focus is economic and includes a thorough scrutiny of the profit centers in the industry as well as potential negatives impacting its smooth operation.
- Algeria
- Australia
- Brunei
- China
- Egypt
- France
- India
- Indonesia
- Italy
- Japan
- Korea
- Malaysia
- Nigeria
- Oman
- Qatar
- Russia
- Spain
- Taiwan
- Trinidad
- U.S.
- UK
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