Among the 21 countries able to liquefy methane and export LNG, Australia, Qatar, and the U.S. are the hands-down leaders, holding more than half the world’s liquefaction capacity among them. For now, Australia holds the top position but its capacity buildout is all but complete. While a number of liquefaction projects are planned Down Under, only one has reached the final investment decision (FID) stage in 2021, and it’s relatively small. Future growth seems much more likely to come from the two other big guns. Developers in the U.S. are cautiously thawing the plans for LNG projects they put on ice in mid-2020, when global natural gas prices slumped along with economies during the early months of the COVID-19 pandemic. And in February, Qatar, which was runner-up to Australian capacity until it slipped to third place due to recent U.S. additions, took FID on the first of two supersized projects to expand its LNG capacity. In today’s RBN blog, we discuss Qatar’s expansion plans and how they relate to developments elsewhere.
As regular readers of RBN blogs know, talk about developing new U.S. liquefaction capacity represents a welcome contrast to conditions in mid-2020, when offtakers were canceling LNG cargoes and construction plans were being delayed or canceled amid collapsing project economics. This year, as we pointed out in Crossroads, the market has swung into undersupply. Pandemic-suppressed economies are recovering (fingers crossed), LNG prices are soaring in Europe and Asia, and prospects are brighter for several projects, not only in the U.S. but in Canada and Mexico as well, as we described in our Go West series. The most recent edition of the RBN LNG Voyager Quarterly Report identifies nine LNG trains under construction at six U.S. projects. These new trains alone would add 52.1 million tonnes per annum (MMtpa; ~6.9 Bcf/d) to U.S. liquefaction capacity, which now totals 80.05 MMtpa (10.6 Bcf/d). And at least 13 other U.S. capacity-expansion projects are in early stages of development, with widely varying prospects for advancing to FID. Underlying decisions about construction in the U.S. and elsewhere are expectations that rising global gas demand will make more liquefaction capacity necessary and that price relationships will reflect that need.
The prospects for major growth in LNG supply are reinforced by Qatar’s decision in February to increase its liquefaction capacity by more than 30 MMtpa to 110 MMtpa (14.6 Bcf/d) in a project that is estimated will also yield the equivalent of 67 Mb/d of ethane, 260 Mb/d of condensate, 130 Mb/d of LPG, and 20 tons/d of pure helium. The initial step might be followed by a second phase that would add a further 16 MMtpa (2.1 Bcf/d) of liquefaction capacity. A distinguishing feature of both projects, and of Qatar’s existing LNG industry, is train scale. Both expansion steps incorporate what Qatari industry observers call “mega trains” with capacities of 7.8 MMtpa (1.0 Bcf/d) each, nearly double the size of the next-biggest units currently in operation.
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