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Douglas-Westwood releases ‘World LNG Market Forecast 2016 – 2020’

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LNG Industry,

Douglas-Westwood has released its ‘World LNG Market Forecast 2016 – 2020’, in which it predicts that the trend of growing capital expenditure (CAPEX) will continue. Specifically, the company estimates that global total expenditure on LNG facilities will reach US$241 billion between 2016 and 2020.

Hannah Lewendon, the Research Team Leader and Assistant Editor, said: “Emissions from the burning of fossil fuels has become an increasingly important consideration in recent decades. In light of environmental damage from energy consumption, there has been movement towards the use of cleaner fuels. With natural gas only emitting half of the greenhouse gases of coal, it provides a mechanism for rapidly reducing emissions.

“With climate change having a far reaching implication to human health, delegates at the recently concluded COP21 climate change conference agreed on a low carbon roadmap. This will continue to support the shift towards gas as a cleaner alternative to oil and coal, with natural gas regarded as a ‘bridging fuel’ to renewables in the future. Furthermore, tightening of environmental legislation will sensitise the transport and power generation industries in using LNG as an alternative fuel, in addition to the price arbitrage effect.”

Mark Adeosun, the Author, said: “In the decades ahead, natural gas will play an increasingly significant role in meeting the world’s energy demand. The long-term potential of the LNG industry is evident as vast reserves of natural gas found in remote regions such as East Africa and the Arctic present considerable LNG opportunities for the future. In the short-term, a combination of low oil prices and a sharp fall in the Asian economic growth forecast has sent the LNG spot price tumbling fast, given that Asia is a vital region for demand growth. Low hydrocarbon prices remain a concern within the LNG market, as most LNG contracts are linked to oil prices.

“Therefore, the global LNG CAPEX outlook to 2020 will be characterised by a change in regional spend. The weaker projected expenditure in 2016 will be a result of a pause in commitments to new LNG projects. By far the largest proportion of the total expenditure will be attributed to liquefaction projects, which account for 66% of spend over the forecast period. Import facilities will constitute 21% whilst spending on LNG carriers will represent 13% of total expenditure between 2016 and 2020.”

Edited from press release by David Rowlands

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