Falling Prices Sink 85 of 90 LNG Projects Worldwide
Eighty-five of the 90 liquefied natural gas (LNG) terminals that energy companies began planning five years ago will find no markets for their product through 2025, according to energy consultants IHS Inc.
“The global LNG industry now resembles a game of ‘musical chairs’ with far more projects than the market can absorb,” Tokyo-based IHS analyst James Taverner told Bloomberg. “There is a very narrow window of opportunity for new projects that want to take final investment decisions by 2020.”
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“It will be increasingly difficult to convince financial institutions to put major sums of money on the table to construct additional capacity,” added Brookings Institution energy and climate analyst Tim Boersma.
As a result, “more than half of the 38 terminals proposed for the contiguous U.S. may never be built,” Bloomberg states. Goldman Sachs analyst Jeffrey Currie says the 20 projects planned for Canada are even less likely to succeed, due to higher costs and environmental opposition.
“This deluge of North American gas exports was once seen as displacing some foreign supplies linked to the price of oil,” Bloomberg notes. “Then the oil market crashed and crude lost half its value, and now that gas from abroad is looking cheap.”
The same day as the Bloomberg report, Malaysia’s national oil and gas company Petronas confirmed its interest in building an LNG export terminal at Prince Rupert, British Columbia. “Petronas would like to reaffirm its commitment to deliver long-term LNG supply to its customers through the Pacific NorthWest LNG project in Canada, despite the current market volatility for oil and gas,” CEO-Upstream Wee Yiaw Hin told Reuters.