Skip to main content

Wood Mackenzie releases FLNG report

Published by
LNG Industry,


Wood Mackenzie has released a new report on floating LNG (FLNG), asking if FLNG has crested the wave.

Wood Mackenzie claims that, despite its small share of the total LNG market, FLNG has generated outsized interest in recent years. In a world that requires tight capital disciple, Wood Mackenzie claims that FLNG offers lower capital investment and manageable costs, especially in frontier locations.

Nonetheless, Wood Mackenzie’s latest review of the global FLNG sector suggests that future project opportunities are in short supply, as FLNG competes for capital and buyers in a busy LNG market.

Liam Kelleher, research analyst, Global LNG, said: “The post-2014 oil price crash and the view that the LNG market was oversupplied saw sanctioned volumes of new-supply LNG drop considerably between 2015 and 2017. Throughout these stagnant years, FLNG was a bright spot in the market and gained industry confidence – three of the seven major projects to take FID between 2015 and 2018 were FLNG developments. Furthermore, the first FLNG cargo was shipped in 2017 with three projects now operational.”

Nevertheless, Wood Mackenzie claims that it has not been plain sailing for the FLNG sector, arguing that there are still a number of challenges to overcome. Governments are concerned by the transfer of jobs to foreign shipyards during construction and to offshore workers during operation. Reportedly, this has seen them focus on onshore developments as opposed to FLNG units. For instance, projects such as Abadi (Indonesia), Greater Sunrise (Timor Leste/Australia) and Tanzania are all proof of this trend.

Kelleher added: “The significant reduction in exploration expenditure since the 2014 price crash has yielded few suitable new gas discoveries. Many of the projects touted as prospective FLNG developments have been in the limelight for a number of years. LNG FIDs recently have favoured high-capacity US onshore projects with lower capital and operating costs.

“We expect this trend to continue, with high-capacity projects in the US, Russia, Qatar and Mozambique looking to take FID. The lack of economy of scale is likely to limit FLNG projects to small scale and remote developments as it competes for buyers, financing and partners in a busy LNG marketplace.

“FLNG has established itself as a credible development option and – with further experience and cost reduction – further projects may quickly appear in an otherwise quiet FLNG FID outlook.”

Read the article online at: https://www.lngindustry.com/floating-lng/30012019/wood-mackenzie-releases-flng-report/

You might also like

 InEight

[WEBINAR] Why Risk-Adjusted Project Forecasting Is Becoming the New Norm

This webinar will walk the audience through a methodology for developing risk-adjusted plans, leveraging remote collaboration techniques for disparate and socially distanced teams. This next-generation risk management approach is already proving itself on numerous oil and gas CAPEX projects. Find out why InEight expects the trend of risk-adjusted scheduling adoption to continue. Register for free today »

 

Polyisocyanurate vs. cellular glass

Johns Mansville looks at the differences between polyisocyanurate (PIR) and cellular glass insulations and discusses which one is better for LNG pipe insulation applications.

 
 

Embed article link: (copy the HTML code below):


 

This article has been tagged under the following:

Offshore LNG news