Page 7 - NorthAmOil Week 23 2021
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NorthAmOil                                   COMMENTARY                                          NorthAmOil














































                         74.6%, spiking at the end of the year alongside  portion” of the pre-FID projects was unlikely to
                         Asian spot prices and demand for LNG. This  progress. It noted how capital-intensive major
                         helped offset the impact of nearly 160 cargo  LNG projects are, while developers have been
                         cancellations earlier in the year, especially dur-  rethinking their capital allocation plans. How-
                         ing June-August, which is traditionally a period  ever, the group said small-scale LNG remained a
                         of low seasonal demand that was significantly  growing segment within the wider LNG indus-
                         exacerbated by the pandemic.         try as a result of these trends.
                                                               The IGU’s report sought to highlight the role
                         Looking ahead                        LNG can play in both the post-pandemic recov-
                         The global LNG industry is anticipated to grow  ery and the energy transition. The group noted
                         further still, though there are uncertainties  this in reference to both LNG as a marine fuel
                         related to the energy transition to be navigated  in a decarbonising world and to gas use more
                         in the longer term. The IGU estimated that as of  broadly.
                         February 2021, there was 892.4mn tpy of lique-  These arguments will be contested by those  The IGU warned,
                         faction capacity awaiting a final investment deci-  advocating a shift away from fossil fuels alto-
                         sion (FID), with the US and Canada accounting  gether in favour of renewables, but thus far con-  however, that a
                         for the majority.                    sumption trends appear to support the IGU’s   “large portion”
                           It is worth noting that this figure will now  expectations that gas demand will continue to
                         be smaller, as a few North American projects  grow. The group said that global regasification   of the pre-FID
                         were scrapped after February. Nonetheless, a  capacity had risen to 850.1mn tpy as of Febru-
                         considerable amount of liquefaction capacity  ary 2021, with 19mn tpy added in 2020. As with   projects was
                         is still awaiting FID, with a backlog of projects  liquefaction, some projects previously targeted
                         deferred from 2020 adding to this. Indeed, only  for start-up in 2020 were pushed back to 2021,   unlikely to
                         one new liquefaction project – Sempra Energy’s  and the IGU said it anticipates future regasifi-  progress.
                         Energía Costa Azul LNG in Mexico – reached  cation capacity additions in both established
                         FID last year, which the IGU said was one of the  regions and new markets. The group identified
                         worst years recently for sanctioned liquefaction  Ghana, El Salvador, Vietnam and Nicaragua as
                         capacity.                            likely new importers that could emerge by the
                           Things are already turning around in 2021,  end of 2021.
                         with Qatar Petroleum (QP) announcing an FID   The dialogue and policy around the energy
                         on its North Field East expansion – the largest  transition are changing rapidly, but for now,
                         LNG project in the world – in February, while  this appears to have done nothing to dampen
                         a number of developers are still targeting FIDs  the appetite for LNG. This could change in the
                         later in the year.                   coming years, but for now the IGU appears con-
                           The IGU warned, however, that a “large  fident of the fuel’s role in the world.™



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