Utility Automation & Engineering T&D - EIA reports on status and outlook of global LNG market

Dec. 19, 2003 -- Liquefied Natural Gas (LNG) is expected to play an increasingly important role in the natural gas industry and in global energy markets in the next several years.

A special Energy Information Administration (EIA) report (released Dec. 16) was undertaken to characterize the global LNG market and to examine recent trends and future prospects.

The global liquefied natural gas (LNG) market is small but growing rapidly...

• The combination of higher natural gas prices, lower LNG production costs, rising gas import demand, especially in North America, and the desire of gas producers to monetize their gas reserves is setting the stage for increased LNG trade in the years ahead.

• In 2002, 12 countries shipped 5.4 trillion cubic feet (Tcf) of natural gas, which is equivalent to 113 million metric tons of LNG - up from 9 exporting countries shipping less than 4 Tcf (84 million metric tons) in 1997.

• Global LNG liquefaction capacity is expected to increase from 6.6 Tcf (139 million metric tons) per year in 2003 to 9.4 Tcf (197 million metric tons) per year in 2007, based on facilities currently under construction.

• The continental United States imported approximately 229 billion cubic feet (Bcf) (4.8 million metric tons) of LNG in 2002, accounting for 4 percent of world LNG trade. U.S. LNG imports in 2003 are expected to more than double, to about 540 Bcf (11 million metric tons), about 2 percent of U.S. natural gas consumption.

• According to Energy Information Administration forecasts, U.S. LNG imports are projected to increase to more than 2.2 Tcf (46 million metric tons), 8 percent of U.S. natural gas consumption, in 2010.

• As of late 2003, there were 151 LNG tankers in the world LNG fleet with 55 tankers under construction. The addition of new ships to the fleet will raise total fleet capacity 44 percent from 17.4 million cubic meters of liquid (equivalent to 366 Bcf of natural gas) in October 2003 to 25.1 million cubic meters of liquid (equivalent to 527 Bcf of natural gas) in 2006.

• In 1990, Japan received 66 percent of world LNG imports; however, Japan's share declined to 48 percent in 2002, reflecting the global expansion of the LNG market.

At the same time, shipments received in the Atlantic Basin rose 120 percent, increasing its share of the global market to 32 percent in 2002.

• In addition to expansions by current LNG exporters, three countries - Egypt, Norway, and Russia - are poised to become LNG exporting countries, as they are currently constructing their first LNG liquefaction plants.

• At least seven additional countries - Angola, Bolivia, Equatorial Guinea, Iran, Peru, Venezuela, and Yemen - are in the planning stages for their first LNG liquefaction plants.

• In addition to expansions by existing importers, three countries - China, India, and the United Kingdom - are poised to become LNG importing countries, as they are currently constructing new regasification terminals.

• At least seven countries - the Bahamas, Jamaica, Indonesia, Mexico, the Netherlands, New Zealand, and the Philippines - are in the planning stages for their first regasification terminals.

• The LNG market is driven by long-term contracts, but these contracts have been growing increasingly flexible in recent years.

• Some newer long-term contracts are designed to provide only a base supply of LNG, which can be supplemented by short-term contracts during periods of high demand.

• Short-term trading has grown from 1 percent of the LNG market in 1992 to 8 percent (400 Bcf or 8.4 million metric tons) in 2002. Short-term trading will continue to grow, especially in the Atlantic Basin, and could reach 15 to 20 percent of the LNG market over the next decade.

• Costs of liquefying, transporting, and regasifying LNG have fallen significantly over the past 20 years.

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