Announcing the release of "The World LNG & GTL Report" at the Offshore Europe exhibition in Aberdeen, Steve Robertson, of international energy analysts Douglas-Westwood, stated that, "We expect over $39 billion to be spent over the period to 2007, over half of which ($20.5 billion) will be spent on constructing a total of 18 new liquefaction trains. LNG carriers are expected to attract the next largest share of the forecast spend, and we anticipate that the fleet will expand to over 200 vessels by 2007, at a cost of some $11 billion.
"Nearly $7.5 billion is expected to be spent on developing import terminal capacity, with 21 new import terminals forecast, along with the expansion of two existing terminals.
"In terms of the forecast amount of new liquefaction capacity, the results of our analysis indicate that we will see new facilities offering a total of 78 million tonnes per annum (mmtpa) of additional output capacity coming onstream between 2003 and 2007. Regionally, this new production capacity will be situated mostly in Africa, followed by Asia and the Middle East.
"Overall, we anticipate that Asia will be the leading region in terms of total expenditure, attracting a Capex of nearly $17 billion over the five-year period. This represents 40% of the total spend, with activity in this region driven mainly by a large number of orders for LNG carriers, the majority of which have been placed with Korean shipyards such as Daewoo, Hyundai and Samsung."
The report is based on analysis of data contained in "The LNG & GTL Projects Database", a new service soon to be launched by Douglas-Westwood and OTM Consulting.
Annie Hairsine of OTM, manager of the new data service, remarked that, "our database identifies a very large number of prospects for the period, representing a potential for strong market growth. For instance, the capacity of all the prospective LNG trains for the 2003-2007 period amounts to some 113 mmtpa of additional output. Of course, not all of the prospects will go ahead on time, and some will not go ahead at all, but the outlook seems very positive."
Some regions are likely to face challenges when locating new import terminals. Although the LNG industry has an excellent safety record, local opposition to new facilities is quite common, and perhaps is now more vigorous given the continuing worries over terrorism.
This is particularly a problem in North America and Western Europe. The Cove Point terminal in Maryland was finally re-opened this year, but reportedly took more than 21 months to gain approval from the Federal Energy Regulatory Commission (FERC) after concerns were raised over the proximity of the terminal to a nuclear power plant.
In Mexico, plans to locate an import terminal in Rosarito, adjacent to a power plant operated by state firm Pemex, were strongly opposed and are now looking uncertain amid suggestions that the necessary land-use permit may be denied. In Italy, the BG group has obtained approval for its terminal at Brindisi, but this terminal also faced significant local opposition.
The impact of these difficulties may well be that more operators choose to locate import facilities offshore. A number of concepts for offshore terminals exist at the moment, many of which are located in the areas identified above.
These include ChevronTexaco's 'Port Pelican' development in the Gulf of Mexico, BHP Billiton's plan to locate a floating terminal 22 miles off the Ventura County coast, and a plan proposed by Cross Gas Energy to locate an offshore terminal near Livorno, Italy.
