Page 5 - LatAmOil Week 23 2021

COMMENTAR
LatAmOil COMMENTARY Y LatAmOil

Global liquefaction capacity also continued to LNG project in the world – in February, while
grow in 2020, with 20mn tpy of capacity added a number of developers are still targeting FIDs
to reach a total of 452.9mn tpy. The IGU noted later in the year.
that all of the new capacity that came online The IGU warned, however, that a “large por-
last year was located in the US. Some planned tion” of the pre-FID projects was unlikely to
start-ups were delayed by the pandemic, how- progress. It noted how capital-intensive major
ever, including in the US, Russia, Malaysia and LNG projects are, while developers have been
Indonesia, and thus global liquefaction capac- rethinking their capital allocation plans. How-
ity would have been even higher now had it not ever, the group said small-scale LNG remained
been for the pandemic. a growing segment within the wider LNG indus-
The average global utilisation rate in 2020 try as a result of these trends.
was 74.6%, spiking at the end of the year along- The IGU’s report sought to highlight the role
side Asian spot prices and demand for LNG. LNG can play in both the post-pandemic recov-
This helped offset the impact of nearly 160 cargo ery and the energy transition. The group noted
cancellations earlier in the year, especially dur- this in reference to both LNG as a marine fuel Sempra’s ECA
ing June-August, which is traditionally a period in a decarbonising world and to gas use more project in Mexico
of low seasonal demand that was significantly broadly.
exacerbated by the pandemic. was the only new
Expectations of demand growth
Looking ahead These arguments will be contested by those gas liquefaction
The global LNG industry is anticipated to grow advocating a shift away from fossil fuels alto-
further still, though there are uncertainties gether in favour of renewables, but thus far con- scheme to reach
related to the energy transition to be navigated sumption trends appear to support the IGU’s FID last year
in the longer term. expectations that gas demand will continue to
The IGU estimated that as of February 2021, grow.
there was 892.4mn tpy of liquefaction capacity The group said that global regasification
awaiting a final investment decision (FID), with capacity had risen to 850.1mn tpy as of Febru-
the US and Canada accounting for the majority. ary 2021, with 19mn tpy added in 2020. As with
It is worth noting that this figure will now liquefaction, some projects previously targeted
be smaller, as a few North American projects for start-up in 2020 were pushed back to 2021,
were scrapped after February. Nonetheless, a and the IGU said it anticipates future regasifi-
considerable amount of liquefaction capacity cation capacity additions in both established
is still awaiting FID, with a backlog of projects regions and new markets. The group identified
deferred from 2020 adding to this. Indeed, only Ghana, El Salvador, Vietnam and Nicaragua as
one new liquefaction project – Sempra Energy’s likely new importers that could emerge by the
Energía Costa Azul (ECA) in Mexico – reached end of 2021.
FID last year, which the IGU said was one of the The dialogue and policy around the energy
worst years recently for sanctioned liquefaction transition are changing rapidly, but for now, this
capacity. appears to have done nothing to dampen the
Things are already turning around in 2021, appetite for LNG. This could change in the com-
with Qatar Petroleum (QP) announcing an FID ing years, but for now the IGU appears confident
on its North Field East expansion – the largest of the fuel’s role in the world. ™

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