FLNG market outlook remains strong, says analyst
Despite challenging market conditions, analyst Westwood Energy forecasts global FLNG capex to total US$37.6 billion between 2018 and 2023.
The sanctioning of Eni’s Coral South FLNG unit signalled the second wave of liquefaction vessels expected to be ordered over the forecast period. The start-up of pioneering projects, and the deployment of the first converted LNG carrier to an FLNG unit, will serve as a proof-of-concept, supporting future investments.
Given the strong fundamental drivers – increasing gas consumption due to economic growth, fuel switching, and energy security – the outlook for the import vessels will remain strong over the 2018-2023 period. Despite near-term concerns due to challenging market conditions, the analyst says, the incentive to use FLNG units to develop gas reserves in remote places remains compelling.
However, Westwood says that a downside risk to the forecast remains, as operators continue to evaluate various alternative development options, including the use of existing onshore infrastructure, which may provide a more economically viable development option or concepts influenced by local political interventions.
According to the “World FLNG Market Forecast 2018-2023,” North America will account for the largest share of the market at 29%, with expenditure amounting to US$11.1 billion over the forecast.
Liquefaction vessels are expected to account for 70% of global FLNG expenditure over the forecast, with import facilities representing the remaining 30% of the market.
With 28 import vessels currently in operation, Westwood expects an additional 47 import vessels to be commissioned over the forecast period, with expenditure on import vessels amounting to US$11.2 billion. This represents an increase of 68% compared to the 2012-2017 period.