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LNG has the potential to bring significant opportunities to the UK supply chain

LNG Industry,

Due to the supply of LNG depending on forward pricing, which can often be short-term and volatile, there will be investment opportunities that don’t materialise. The overall trend, however, is ‘on the up.’

Our figures are also pointing to this conclusion. According to EIC DataStream, the EIC’s global energy project-tracking database, 150 LNG terminals are on the drawing board worldwide over the next decade and we are currently tracking 68 active and future LNG projects in Europe.

Furthermore, our latest quarterly report (EIC Monitor Q4: October – December 2009), which was outlined in my previous column found the strongest percentage of growth to be in the midstream sector - an increase in the total value of new projects of 37% over the previous quarter (US$ 29 billion on Q4 2009 as compared to US$ 21 billion in Q3 2009). While LNG cannot lay claim to all these midstream projects, it clearly accounts for some. 

Of course, with financing and planning sometimes providing insurmountable challenges, some of these projects may not come to fruition, but there is a clear, long-term trend. The recent gas supply shortages and dependence on pipeline supplies from Russia and the Ukraine can only go to provide another catalyst for LNG’s long-term development.

European projects

So what are the opportunities for the UK supply chain? The sector clearly offers some potential. Some European projects worth referencing:

  • Italy currently leads the European LNG table with several LNG-related projects in the works. Projects at the feasibility or planning stages include the Augusta (Sicily) LNG terminal, the Marche LNG terminal and the Falconara LNG terminal. Be warned, however: Italy can be very time consuming in terms of project approvals.
  • Spanish LNG projects include the Reganosa (El Ferrol) LNG Terminal Expansion Project in Galicia which is at the bidding and tendering stage and the El Musel Commercial Port near Gijon. EIC DataStream also identifies three active or future LNG projects in Spain.
  • In France, there is the joint venture between Shell and Vopak to develop an LNG terminal at Fos-sur-Mer and the expansion of the Montoir-de-Bretagne terminal. Projects where contracts have been awarded include the Dunkirk LNG terminal and Fos Cavaou (Fos-Sur-Mer) LNG terminal.
  • And in the UK, National Grid is currently assessing a fourth expansion phase at the Isle of Grain LNG terminal in Kent. An LNG terminal at Canvey Island in Essex and Teeside LNG Terminal are also at the pre-FEED (Front End Engineering Design) and feasibility stages respectively.
  • Further afield, Russia is also proving a popular destination for LNG with EIC DataStream currently logging 10 active and future LNG projects.

From planning to the securing of financing to volatile, forward pricing, there remain barriers to long-term investment in LNG. On the whole, however, the LNG sector is ‘on the up’ and I look forward to tracking its developments over the next few years.

Author: Mike Major, CEO, The EIC.

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