Page 7 - FSUOGM Week 23 2021

FSUOGM COMMENTARY FSUOGM

of new import demand, with the country having Things are already turning around in 2021,
locked down and reopened early in response to with Qatar Petroleum (QP) announcing an FID
the pandemic. on its North Field East expansion – the largest
Global liquefaction capacity also continued LNG project in the world – in February, while
to 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 pro-
start-ups were delayed by the pandemic, how- gress. It noted how capital-intensive major LNG
ever, including in the US, Russia, Malaysia and projects are, while developers have been rethink-
Indonesia, and thus global liquefaction capacity ing their capital allocation plans. However, the
would have been even higher now had it not group said small-scale LNG remained a grow-
been for the pandemic. ing segment within the wider LNG industry as a
The average global utilisation rate in 2020 was result of these trends.
74.6%, spiking at the end of the year alongside The IGU’s report sought to highlight the role
Asian spot prices and demand for LNG. This LNG can play in both the post-pandemic recov-
helped offset the impact of nearly 160 cargo can- ery and the energy transition. The group noted
cellations earlier in the year, especially during this in reference to both LNG as a marine fuel
June-August, which is traditionally a period of in a decarbonising world and to gas use more
low seasonal demand that was significantly exac- broadly.
erbated by the pandemic. These arguments will be contested by those
advocating a shift away from fossil fuels alto-
Looking ahead gether in favour of renewables, but thus far con-
The global LNG industry is anticipated to grow sumption trends appear to support the IGU’s
further still, though there are uncertainties expectations that gas demand will continue to
related to the energy transition to be navigated grow. The group said that global regasification
in the longer term. The IGU estimated that as of capacity had risen to 850.1mn tpy as of February
February 2021, there was 892.4mn tpy of lique- 2021, with 19mn tpy added in 2020. As with liq-
faction capacity awaiting a final investment deci- uefaction, some projects previously targeted for
sion (FID), with the US and Canada accounting start-up in 2020 were pushed back to 2021, and
for the majority. the IGU said it anticipates future regasification
It is worth noting that this figure will now capacity additions in both established regions
be smaller, as a few North American projects and new markets. The group identified Ghana,
were scrapped after February. Nonetheless, a El Salvador, Vietnam and Nicaragua as likely
considerable amount of liquefaction capacity new importers that could emerge by the end of
is still awaiting FID, with a backlog of projects 2021.
deferred from 2020 adding to this. Indeed, only The dialogue and policy around the energy
one new liquefaction project – Sempra Energy’s transition are changing rapidly, but for now, this
Energía Costa Azul LNG in Mexico – reached appears to have done nothing to dampen the
FID last year, which the IGU said was one of the appetite for LNG. This could change in the com-
worst years recently for sanctioned liquefaction ing years, but for now the IGU appears confident
capacity. of the fuel’s role in the world. ™

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