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Next generation LNG terminals set to get smaller to offer greater flexibility

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LNG Industry,

Reuters reports that while the LNG market is growing year on year, LNG export and import terminals are shrinking. Indeed, the LNG sector's next-generation infrastructure is being designed for customers looking to purchase smaller quantities and sign shorter, more flexible contracts.

LNG export terminals have traditionally been large-scale, custom-built facilities costing tens of billions of dollars. As a result, to justify the investment, they typically required equally large, long term supply deals (often lasting a decade or more).

In contrast, future projects are featuring new modular-style designs built to snap together like Legos. This allows for small to mid-scale liquefaction or regasification plants that can be expanded if and when demand grows.

These facilities, with far smaller liquefaction units - known as trains - are "more consistent with market conditions," said John Baguley, chief operating officer of Australia-based LNG Ltd, which has proposed mid-scale LNG plants in the US and Canada.

In 2008, the average contract was for 18 years and more than 2 million tpy. By 2016, it had dropped to less than eight years and less than 1 million tpy.

These figures clearly demonstrate a departure from the traditional large-and-lengthy contracts, and a transition to the new trend of smaller and more flexible short term orders.

This impact on LNG terminal design is further evidence to suggest this will be a long term shift for the industry.

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