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Global LNG terminal investments are experiencing difficulties


It was noted that there were delays or serious difficulties in the final investment decisions of at least 26 LNG export terminal projects planned around the world.

According to the latest liquefied natural gas (LNG) report from the Global Energy Monitor, the cost overruns, delays in plans and the high downtime rate that have plagued the LNG industry have been exacerbated by workforce disruptions due to COVID-19 last year.

According to the report titled “Worrying investment: Global LNG Terminals Update 2021”, despite attempts at post-COVID-19 economic recovery, at least 26 LNG export terminal projects with a total annual capacity of 265 million tons (MPTA) have resulted in delays in the final investment decision or other significant is experiencing difficulties. These terminal projects correspond to 38 percent of the annual export capacity of 700 million tons under construction worldwide.

11 OF THE LNG PROJECTS THAT HAVE BEEN DROPPED ARE IN THE USA

North America holds 64% of LNG export capacity under construction or project on a global scale. The projects experiencing the most problems are also located in North America. The rapid capacity increase in Qatar and Russia’s Arctic, with low production costs, increases the risks of companies developing US LNG export projects. Of the 26 LNG export terminal projects for which a delay in financial investment decision or other significant disruption has been reported, 11 are located in the USA.

LNG IMPORT CAPACITY CONTINUES ITS RAPID GROWTH

On the other hand, LNG import capacity continues to grow rapidly. This growth includes projects that can increase the global installed capacity by 70% of the projects that are currently under construction or development.

32% of the installed capacity under construction or in the project phase is located in China, 11% in India and 7% in Thailand. Among the LNG projects developed outside of Asian countries, Brazil stands out with 13 LNG import terminal projects under construction or at the project stage.

In contrast, on a global scale, only one LNG export project was developed last year. An investment decision has been made for the Costa Azul LNG Terminal in Mexico.

The report points out that the French energy company Total’s declaration of force majeure for the Mozambique LNG Terminal after the rebels’ attack reveals the fragility of LNG terminals worth tens of billions of dollars.

LNG INDUSTRY IS SEEN AS A CLIMATE CHANGE PROBLEM

The LNG sector, which was seen as a potential solution to combating climate change in the past, is increasingly seen as a climate problem, especially by European buyers. The 2050 net zero scenario set by the International Energy Agency (IEA) requires interregional LNG trade to decline rapidly by 2025.

News2Sea

The opinions expressed herein are the author’s and not necessarily those of News2Sea.

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