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2019 a banner year for LNG

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LNG Industry,

According to the latest Reuters report, the Chief of the International Energy Agency (IEA) has announced that there have been record investments of US$50 billion in LNG this year.

Canada and the US have reportedly been the main global drivers of the investment, with Asia’s industrial sector being another notable factor. Indeed, China in particular has seen significant growth in LNG imports, and is expected to overtake Japan as the largest global importer of LNG in five years.

More than 170 billion m3 of liquefaction capacity is still scheduled to take final investment decision (FID) this year, reports the IEA. This is far above the record level of 70 billion m3, recorded in 2005.

According to the IEA, the growing popularity of the equity offtake marketing structure has provided a big boost to contracting activity and project sanctioning. Under this new structure, companies have access to LNG volumes according to their equity stake, making long-term sale and purchase agreements (SPAs) less appealing.

The potential market impact of continued LNG growth in the US is considerable – already the country is forecast to account for two-thirds of the global LNG export growth. Fatih Birol, Executive Director for the IEA, has suggested that this growth could shift Asian pricing dynamics in favour of gas-linked pricing, over oil-linked pricing. As things stand, approximately 70% of LNG contracts are oil-indexed, compared to 30% gas. This could soon become a 50:50 split according to Birol.

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