The demand for liquefied natural gas (LNG) hit 265 million tonnes in 2016, opening yet more opportunities for equipment crossovers between the LNG industry and the industrial gas sector.
According to oil giant Shell’s new LNG outlook, the demand for LNG in 2016 kept pace with a planned strong increase in new supplies, with greater than expected growth in demand from Asia and the Middle East absorbing the rise in supply from Australia.
The increase was largely due to the addition of six new importing countries, with the total of importing countries now standing at 35 compared to just 10 at the start of the century.
Egypt, Pakistan and Jordan – all new importers – made up three of the top five fastest growing LNG importing countries in the world, importing a combined total of 13.9 million tonnes of LNG supply. Other new LNG importers included Colombia, Jamaica and Poland.
China and India emerged as two of the world’s fastest growing buyers of LNG, dominating the import growth statistics along with the new countries that entered the market.
The bulk of LNG exports in 2016 came from Australia with records highlighting that exports from the South Pacific rim country increased by 15 million tonnes to a total of 44.3 million tonnes.
The outlook identifies that new LNG demand will be driven predominately by floating storage regasification units (FSRUs), small-scale LNG and transport and replacing declining domestic gas production – all of which companies in the industrial gas industry can capitalise on.
A range of industrial gas equipment is being continually adapted or developed for the marine sector and the sea-based transport of LNG – spanning liquefaction, storage and through to delivery.
As a result, industrial gas equipment can be used to unlock LNG’s true potential. A report by Morder Intelligence, titled Global Cryogenic Equipment Markets – Growth, Trends and Forecasts (2016-2021), cited a compound annual growth rate (CAGR) for the cryogenic equipment field of 7.4% - largely driven by the LNG business.
”The outlook for LNG demand is set to grow at twice the rate of gas demand, at 4-5% a year between 2015-2030”
Maarten Wetselaar, Integrated Gas and New Energies Director, Shell
Fluctuating oil prices, global LNG supply and demand dynamics, and the cost of new LNG facilities are all expected to influence LNG prices in the future. In addition, the report suggests that LNG trade is changing to meet the evolving needs of buyers, with the pendulum starting to swing towards shorter-term and lower-volume contracts.
It claimed that one-third of new LNG supply growth is already online but volumes are set to expand by 50% from 2014-2020.
So, will demand eventually outpace supply? As Maarten Wetselaar, Integrated Gas and New Energies Director at Shell, described, “Global LNG trade demonstrated its flexibility time and time again in 2016, responding to shortfalls in national and regional gas supply and to new emerging demand.”
“The outlook for LNG demand is set to grow at twice the rate of gas demand, at 4-5% a year between 2015-2030,” he suggested.
The LNG Outlook is the first of its kind for Shell and draws upon independent industry data and internal analysis.