It’s interesting to read GlobalData’s take this week on BP’s LNG business as it pivots away from big oil in the long-term, and the commitments that it’s claimed it needs to make in what is a relatively uncertain LNG market right now.
It’s been a mixed year for LNG markets. On the one hand, it was hoped that 2020 would be a cornerstone year for LNG as one of many fuelling options available to help the maritime sector navigate the choppy waters of IMO 2020. Under a new global cap, in force from 1st January 2020 by the International Maritime Organisation (IMO), ships have to use marine fuels with a sulfur content of no more than 0.50%, in an effort to reduce the amount of sulfur oxides emitted. It’s a move which has been a long time coming and had been expected to lean on the use of LNG as a shipping fuel.
At gasworld, we understand that a relatively healthy compliance with IMO 2020 has indeed provided a boost to the LNG sector.
From an industrial gas equipment perspective, there have been other highlights throughout the year too, not least the news in June that the US Department of Transportation (US DOT) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) would allow the use of cryogenic railcars to ship LNG from production plants to destinations across the US. This is expected to provide a lift to those in the small-scale LNG sector.
Yet for all of this positivity, there’s also no escaping what an equally tough year it has been for LNG markets at the hands of a Covid-19 (coronavirus) pandemic that has shaken economies and so rapidly cooled oil, gas and petrochemicals demand. It seems that there’s no escaping discussion of the pandemic this year, and as part of the interconnected energy markets, the LNG business is among those impacted by Covid’s knock-on effects.
Various projects have been the subject of delays or postponements as the economic climate endures such uncertainty. Indeed, delays to the Tortue LNG project offshore Mauritania and Senegal are cited in GlobalData’s commentary and described as ‘a major blow’ which could further delay the supermajor’s 2025 target (16 MTPA capacity) from being achieved.
And, at the time of writing, it seems as though that uncertainty in LNG/energy markets may linger for some time yet. The much-feared ‘second wave’ of Covid-19 appears to be gathering momentum in parts of Europe, for example, as countries grapple with the balancing act of unlocking their economies while keeping a public health crisis in check; meanwhile, for other parts of the world it seems as though the first wave of the pandemic is still being fiercely felt.
According to GlobalData, LNG will continue to play a major role in BP’s low-carbon energy and electricity goals and the company is targeting significant growth in the sector. That could prove to be just the kind of boost LNG markets are looking for.