Singapore: Liquefied natural gas production may increase at the slowest pace in 28 years because of equipment breakdowns, reduced gas supplies and delays in new projects, a London-based consultant said at a conference attended by Bloomberg.
Output may rise less than 2% this year from 172.6mn metric tons in 2007, said Andy Flower, an industry consultant and a former executive at BP's LNG business. There is "uncertainty" over project approvals next year after the financial crisis.
"There will be a big temptation to defer final investment decisions," Flower said here yesterday. "Nobody knows what will happen to costs."
Growth in LNG trade has slowed after expanding 7.3% last year because of the delayed commissioning of new ventures in Qatar, Russia and Yemen, technical problems in Algeria and Norway, and limited gas supplies to feed liquefaction plants in Nigeria and Egypt. The global recession may also cut LNG demand as it curtails electricity use in Asia.
The output growth estimate for this year is "the lowest since 1980-81 when LNG output fell after the collapse of Algeria-US LNG trade," Flower said. Production rose 0.4% in the first nine months compared with a year earlier, he said, citing data from importing nations.
Output may climb about 25mn tons in 2009 and 2010, respectively, as new projects start operations in countries including Qatar, Yemen, Indonesia and Australia, Flower said. The annual increase may suffice to meet yearly demand from South Korea, the world's No2 importer of the fuel, he said.
Only one project was approved this year at the port city of Arzew in Algeria, Flower said, compared with the Chevron-led project in Angola and Woodside Petroleum Ltd's Pluto project in Western Australia in 2007. Less than 15mn tons of capacity in total was approved over the last two years.
More than 35mn tons of liquefaction capacity awaits approval next year including the Chevron-led Gorgon project in Australia, ExxonMobil's LNG plant in Papua New Guinea, Nigeria LNG's seventh train, Indonesia's Senoro plant and BG Group's Queensland project, Flower said. [4/12/08]
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