I recently had the pleasure of accompanying the October issue of LNG Industry to the Gastech Conference and Exhibition in Singapore. It was great to meet so many of our readers, learn more about your latest projects and products, and hear your views on the prospects for our industry going forward. Upon arriving in Singapore, visitors to the show would have instantly noticed the haze that is currently blanketing the city-state. The smog is the result of forest fires in Indonesia, which are reportedly caused by large corporations who are using the slash-and-burn method to clear vegetation for palm oil, pulp and paper plantations. Although the Singapore EXPO centre served as a sanctuary from the pollution, visitors to Gastech would have been forgiven for thinking that there was ‘something in the air’ during the show.
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Previous Gastechs have been full of the promise of the ‘golden age of gas’. However, a turbulent year of lower commodity prices and weakened demand growth in Asia served to dampen the atmosphere at this year’s show somewhat. Capacity oversupply and price risks have resulted in a level of uncertainty that is threatening project delays and lower investment. In its recently published World LNG Market Forecast 2016 – 2020, Douglas-Westwood (DW) outlines a shift in focus for the global LNG industry. The report’s author, Mark Adeosun, says: “With commodity prices depressed, future LNG projects are uncertain, as those which are currently in Front End Engineering Design (FEED) are struggling to make economic sense in the lower price environment.” DW conservatively estimates that just six of the 11 US LNG export terminals originally planned for start-up between 2016 and 2020 will actually be built.1
The keynote speakers at Gastech were quick to offer an alternative perspective, emphasising that the long-term future of the industry remains bright. Paul Sullivan, the Co-Chairman of Gastech and Senior Vice President Global LNG and FLNG at WorleyParsons, stressed that now was not the time to lose confidence in the industry: “It is time to raise our game and approach more radical partnering between investors and contractors.”
BG Group’s CEO, Helge Lund – who recently saw his company’s 3Q15 core profits fall 37% – admitted that it was an uncomfortable time to be in energy. Although Mr Lund reiterated his faith in the long-term future of the industry, he admitted “business as usual is no longer an option.” He urged the industry to grasp the opportunity to look afresh at its business model: “We cannot assume US$100 oil and attracting capital will need a more competitive return. We can do this by focusing on discipline, innovation and people.”
In these tough times, our industry must embrace innovative technical solutions that help to cut costs and improve efficiency. LNG Industry is committed to providing the platform for these new solutions to be heard/read. That is why we are taking the advice of WorleyParsons’ Mr Sullivan and ‘raising our game’ by becoming a monthly publication, starting next year. Each of our 12 issues will be packed full of the latest industry news, in-depth technical articles and recent case studies to keep you informed of the latest developments and practices across the entire LNG value chain. If you have a story to tell, please drop me a line on the email address below. And if you haven’t already, download our free app to receive the latest issue (and back issues) of the magazine straight to your Apple or Android device before the hard copy arrives through your letterbox. Simply search ‘LNG Industry’ in the App Store or on Google Play.
1. ‘A shift in focus for the global LNG business’, Douglas-Westwood, http://www.douglas-westwood.com/a-shift-in-focus-for-the-global-lng-business/ (accessed on 10 November 2015).