LNG Investment to Grow Through 2020

Market research firm Douglas Westwood has published a report indicating that annual LNG facility investment is set to increase through 2020, with new export projects leading the way.

The firm predicts LNG capital investment of $240 billion over the next five years, a third higher than in the preceding period. $160 billion of this will be in new liquefaction plants, also a third higher than in 2010 through 2015. American consultants McKinsey confirm the outlook with a recent prediction that investment will bring global supply up 40 percent by 2020, with demand rising at about 5 percent annually.

Douglas Westwood forecasts additional construction in all regions except for Australia, which has a great deal of existing capacity online and more set to hit the export market in 2016.

Australian observers have been forecasting price troubles for the country's multiple LNG developments, which appear set to produce more than the Asian market can easily absorb. Multiple new LNG trains will come online next year, but demand is down: Japan is resuming the use of nuclear power, offseting its imports; cheap coal is making gas uncompetitive in Indonesia; and the slowing Chinese economy means less demand from the world's third-largest importer of LNG, bringing an end to the nation's “golden age of gas” forecast by the International Energy Agency in 2011.

Douglas Westwood predicts U.S. LNG export capacity will rise at a pace determined by regulation and investment climate, and more modestly than current proposals suggest. 11 plants are planned for startup within the study's timeframe, but the firm suggests six might actually be built. The finding is consistent with announcements of scalebacks at some American exporters, like Cheniere, which recently dismissed its CEO for his opposition to cuts to the firm's construction plans.