LNG export projects in jeopardy?

Only a small percentage of proposed LNG export projects currently under development across the globe will be completed, due to high costs and weakening gas prices the news agency Thompson Reuters reported.

Discoveries of vast amounts of natural gas in the US, Canada, Australia, East Africa and the Mediterranean have prompted a dramatic increase in proposed LNG export projects.

However, the high cost of development and thin profit margins will lead to the failure of most projects, Matthias Bichsel, director of projects and technology at Royal Dutch Shell said in an interview with Reuters.

"There is always so much talk about these big LNG projects around the world, but only a small fraction of them will get built," said Bichsel. "Costs in the oil and gas sector are still on the rise and outpacing inflation, and gas projects are extremely price-sensitive because the margins are so thin."

Encouraging outlook for LNG nonetheless

Despite this, Bichsel said the outlook for LNG as a whole was encouraging.

"We're quite excited about gas, there is a lot it can be used for, for instance gas to liquids, gas for transport or gas to chemicals, and there's also a lot of work being done to bring down the production costs of LNG."

"In oil, it's more maintaining production but in the long term, we're talking decades ahead, we see a decrease in oil demand and gas will take a more prominent role, including from shale gas. But it'll take time."

Edited from various sources by Ted Monroe

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