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Nigeria, Mozambique, Canada, Russia, Qatar stifling LNG market as US ventures

Just as Nigeria recently sealed a deal to deliver the seventh train of Liquefied Natural Gas (LNG), since recently, the US government under Donald Trump has stepped up investments in LNG production and exports.

The addition of the Cove Point LNG plant in Maryland brings the number of major LNG export centers in the U.S. outside Alaska to two. Sabine Pass in Louisiana became the first LNG export platform to emerge from the shale gas revolution, and it is expanding still.

By the end of this year, another train at Sabine Pass is expected to be in commercial operation.

From now until next year, the U.S. Energy Information Administration expects four more LNG export projects to come online across the country, from Corpus Christi and Freeport in Texas to Cameron, La., and Elba Island, Ga.

By 2021, baseload U.S. LNG export capacity will exceed 9 billion cubic feet of gas per day (Bcf/d), according to EIA’s figures. The rise of U.S. LNG is upending the way the commodity is marketed and sold globally.

EIA analysts point out in a recent report that there has been a growing drive to grow investments in the sector. The report said “Besides Australia and the United States, several other countries also increased LNG exports in 2017,” noting that “The return to service of Angola LNG and increases from several countries including Nigeria, Malaysia, Algeria, Russia, and Brunei added another 1.4 Bcf/d of LNG exports, more than offsetting a combined decline of 0.6 Bcf/d in exports from Qatar, Indonesia, Norway, Peru, the United Arab Emirates, and Trinidad”.

Basically, LNG is gaining popularity in East Asia, the region with the fastest economic growth. India and Pakistan have also been expanding their LNG consumption. Supply is now racing to catch up with demand from all corners of the globe. New projects in Australia, Papua New Guinea and Russia have all recently entered the market, and more are coming.

“A wave of new projects in Mozambique, Qatar, Russia, and the United States are expected to pass FID [final investment decisions] over the 2018-2019 period,” notes the Westwood Global Energy Group.

The rush means the world is expected to be in an LNG oversupply situation until the mid-2020s, although rising Asian demand and European consumption should cut back on the oversupply by 2025 or so, Westwood says.

Business Hilights recalls that West Africa LNG veteran, Nigeria LNG recently contracted with a consortium to build a seventh LNG export train.

Key target of the plans include expanding the existing Bonny Island LNG platform by more than 36 percent, according to McKinsey Energy Insights. The $12 billion proposed project “will increase the plant’s capacity from 22 mtpa to 30 mtpa,” analysts said in an overview.

Already, Anadarko Petroleum Corp.’s plans for a major LNG project in the East African nation of Mozambique lumber forward, though slowly.

Although Anadarko is on the record saying that its gas discoveries in Mozambique could lead that nation to become the world’s third largest exporter, more than six years have passed and no LNG has shipped from the proposed site since then, and the developers have offered no clear project timeline on the project’s website.

Partner Mitsui & Co. is closing in on a final investment decision on Mozambique LNG, with an announcement on the FID likely by March 2019, according to Reuters. Mitsui told the news agency that it had secured commitments for buyers that will cover 9 mtpa of the 12 mtpa capacity envisioned, to be completed and in operation by 2023.

And in June, Anadarko announced that it had reached an off-taking agreement with Tokyo Gas Co. Ltd. and Centrica LNG a deal that calls for 2.6 mtpa in shipments from Mozambique LNG beginning from startup until the 2040s. Its location in the Indian Ocean would make it ideally suited to supply India with a steady stream of gas.

“Tokyo Gas and Centrica have a strong global reputation in the industry, and we are delighted they have made this commitment to the Mozambique LNG project,” Anadarko Vice President Mitch Ingram said in a statement.

“This off-take arrangement takes full advantage of Mozambique’s favorable central location, which enables Mozambique LNG to supply customers in both the European and Asian-Pacific markets.”

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