As global LNG capacities increase with each passing year, expectations are often surpassed and this is set to continue this year as 2008 sees the realisation of a number of projects set in motion in recent years.

Most of the liquefaction capacity expansions targeted for the period 2007-2009 are expected to come online in 2008, mostly in the Middle East as several projects in Qatar are finally completed. Long-awaited production will start from Russia's Sakhalin, Indonesia, and Nigeria as well as from Australia and Yemen, while Europe will add nearly 26 million tpy of import capacity - mostly in the UK, but also in France and Italy if current construction meets targets. Similarly, the robust Asia and North Pacific region is expected to add 26 million tpy in 2008 - spread among India, China, and Korea and with close to another 19 million tpy due online in 2009.

Also receiving the green light in 2007, after considerable delays and doubts, and starting construction was Woodside Energy Ltd.'s Pluto LNG project, involving an investment of more than $5bn. The project includes development of Pluto gas field, off northwest Western Australia, and construction of an onshore LNG plant in the Pilbara region of Western Australia.

Caution is thought to be urged however, as despite the optimism and rapidly increasing global capacities there are a few potential spanners in the works.

While production capacity rises, material costs are showing sharp increases too and Cambridge Energy Research Associates estimate that since 2002, upstream capital costs as part of an LNG project have risen by 80%.This would seem to reflect industry observations that capital costs of annual capacity in an LNG project rose to more than $600 per tonne in 2006 from $200 per tonne in 2002.