LNG supply outlook

bcm

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11 With the notable exception of the Calcasieu Pass LNG project in the United States, which reportedly started construction in early April 2019 after having received its final authorisation from Federal Energy Regulatory Commission and export authorisation from the Department of Energy without officially declaring FID (Reuters, 2019d).

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the Calcasieu Pass LNG project, which started construction in April 2019, is set to be commissioned in 2022. Sabine Pass train 6 took FID in early June 2019, with long-term contracts with Vitol and PETRONAS starting in 2022 and 2024 respectively.

Three other projects – Tangguh LNG train 3 in Indonesia, Petronas FLNG 2 in Malaysia, and Yamal LNG train 4 in Russia – are all expected to start operations by end-2020, altogether adding almost 9 bcm/y to global export capacity.

Africa also contributes to LNG export capacity expansion. After the commissioning of Cameroon’s floating unit in 2018 (the first new project on the continent since the development of Angola LNG), two offshore projects – Coral South FLNG in Mozambique and Tortue FLNG in Mauritania and Senegal – are scheduled to start operations by 2022.

These developments result in a concentration of capacity additions over the coming two years. However, a significant proportion of global liquefaction capacity has remained offline in recent years: over the past four years, unplanned capacity disruptions resulted in 12–14% of total nameplate capacity being offline (IEA, 2018b). This forecast assumes that several liquefaction plants will remain offline or will run below their nameplate capacity until 2024 for several reasons (technical issues, feed gas limitations, security risk).

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Australia, Russia and the United States together account for almost 90% of LNG export growth to 2024 – with the United States alone rising to two-thirds of total growth.

In accordance with its strong position in new capacity development, the United States is the largest contributor to LNG export growth over the forecast period, accounting for two-thirds of additional volumes to be marketed between 2018 and 2024 (Figure 3.21).

US LNG is expected to become the largest source of supply by the end of the forecast period, reaching 113 bcm/y in 2024, ahead of Australia (107 bcm/y) and Qatar (105 bcm/y) (Figure 3.22). Australia will see its exports increase by 16 bcm/y as the last projects to be commissioned ramp up, while Qatar’s output is assumed to remain flat in the absence of FID for expansion at the time of writing. On a regional basis, the Middle East remains the second-largest exporting region at 120 bcm/y after Asia Pacific (183 bcm/y) and ahead of North America. Yemen is not

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12 Including Novatek’s small-scale Vysotsk plant in the Baltic Sea (0.9 bcm/y), which started operations in April 2019.

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LNG trade flows

LNG trade in the Pacific Basin and Middle East accounted for 78% of total LNG flows in 2018 at a volume of 337 bcm, increasing from 301 bcm in 2017. This results mainly from the growth in imports into China (up 21 bcm/y), Korea (up 8.5 bcm/y) and Pakistan and India (up 3.5 bcm/y each), while Japanese imports were almost stable (down 1 bcm/y) and those into the Middle East declined (down 2.6 bcm/y).

Figure 3.23 LNG import in the Atlantic and Pacific Basins by origin, 2014–24

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The Pacific Basin remains the main source of LNG trade growth, with a doubling of its imports between 2014 and 2024.

In the Atlantic Basin, imports increased marginally from 94 to 96 bcm/y between 2017 and 2018 as a whole, but with some compensating effects between a 10% increase in Europe (up 6 bcm/y), some stability in both North and South America (down 0.5 bcm/y each), and a steep decline in Egyptian imports (down 5 bcm/y) as the country saw its own production increase sharply.

By 2024 LNG flows in the Pacific Basin and Middle East are expected to reach 436 bcm/y or a 30% increase from 2018, thus accounting for 80% of total LNG trade (Figure 3.23). Growth in export volumes from US, Australian, African and Russian projects currently under development account for most of the additional trade east of the Suez Canal. Flows in the Atlantic Basin grow by 14% to 110 bcm/y by the end of the forecast period, with US LNG providing the bulk of additional volumes.

Exports from Qatar are expected to shift further to the east, as the Pacific Basin’s share of its trade increases from 76% in 2018 to 83% by 2024 (Figure 3.24). US LNG flows were almost balanced in 2018 (59% to the Pacific Basin) with Korea becoming its largest destination, after its first two years of exports were slightly dominated by Atlantic Basin destinations; Chile and then Mexico were the largest destinations by volume in 2016 and 2017. Exports to the Pacific Basin are expected to increase strongly to reach a share of 75% of US LNG flows by 2024, while Europe becomes the main destination on the Atlantic Basin. Additional Russian LNG flows from the Yamal peninsula are expected to be almost equally balanced between basins.

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