Offshore staff
LONDON– Global FLNG capex is projected to total $52.8 billion over the 2019-2024 period, according to Westwood Energy’s latest market forecast.
As LNG exports take a foothold in the US, investment in floating liquefaction facilities in North America will play a pivotal role in global FLNG expenditure over the forecast, accounting for 45% of expenditure. A combination of drivers, including perceived technological maturity, an improved macroeconomic outlook, and cost reduction in the supply chain, will support an increase in project sanctioning over the next 24 months, according to the analyst.
Following a 22-month hiatus in project sanctioning, the FLNG industry is moving into a ‘second wave’ of developments, with the market opening up to more participants. The size and technical complexity/risk of early pioneer developments allowed only the largest NOCs and IOCs to move forward with projects on a balance-sheet financing basis.
As moreFLNG units become operational, the analyst says, the more project structures and financing are more akin to the well-established FPSO market. This includes a move to syndicated project financing (e.g. as arranged for Eni’s Coral South unit) and construction financing / sale and leaseback structures (such as Golar’sHilli Episeyo unit.)
Increased gas demand driven by economic growth and fuel switching combined with ongoing concerns over energy security underpins the import vessels market. The key driver for the use of floating units, the analyst says, remains the short lead-time from sanction to operation and consequently, tendering activity for FSRUs is expected to remain strong over the 2019-2024 period.
Over the 2019-2024 period, liquefaction vessels will account for 80% forecast expenditure, totaling $42 billion. This investment will subsequently lead to the installation 15 FLNG vessels and an addition of 47.9 mmtpa to global export capacity by the end of the forecast period.
With the challenging market conditions seen over 2015-2017 starting to ease, the analyst says, forecast FLNG expenditure is expected to grow at a 14% CAGR, as operators seek to take advantage of the current competitive pricing structure within the oilfield services and equipment markets.
According to the report, forecast liquefaction spend in Africa will total $15.4 billion over 2019-2024, with 34% of this spend already committed. Gas-to-power projects will account for a significant proportion of import vessel demand in Africa and Asia.
Strong global fundamentals for regasification vessels have prompted some leasing contractors to sign letters of intent for optional units to be delivered in the latter years of the forecast. A total of 18 countries are expected to have their first floating import vessels installed over the forecast period.
07/19/2018
