FLNG Market Oversupplied

January 30, 2019

World Energy Reports LLC.
FLNG Market .jpg

Floating liquefied natural gas (FLNG) projects may have peaked already amid intensifying competition in the LNG space, a  review of the global FLNG sector released by global natural resources consultancy Wood Mackenzie has suggested.

In a world requiring tight capital discipline, FLNG offers lower capital investment and manageable costs, particularly in frontier regions. But Wood Mackenzie indicated that future project opportunities are in short supply as FLNG competes for capital and buyers in a busy LNG market.  

According to Liam Kelleher, research analyst, Global LNG: “The post-2014 oil price crash and the view that the LNG market was oversupplied saw sanctioned volumes of new-supply LNG drop considerably between 2015 and 2017. Throughout these stagnant years, FLNG was a bright spot in the market and gained industry confidence - three of the seven major projects to take FID between 2015 and 2018 were FLNG developments. Furthermore, the first FLNG cargo was shipped in 2017 with three projects now operational.”

However, it has not been plain sailing for the FLNG sector, and it still faces a number of challenges. Governments are concerned by the transfer of jobs to foreign shipyards during construction and to offshore workers during operation, the report said.

This has seen them push for onshore developments rather than FLNG. Projects including Abadi (Indonesia), Greater Sunrise (Timor Leste/Australia) and Tanzania are indicative of this trend, it said.

Kelleher said: “The significant reduction in exploration expenditure since the 2014 price crash has yielded few suitable new gas discoveries. Many of the projects touted as prospective FLNG developments have been in the limelight for a number of years. LNG FIDs recently have favoured high-capacity US onshore projects with lower capital and operating costs.”

He added: “We expect this trend to continue, with high-capacity projects in the US, Russia, Qatar and Mozambique looking to take FID. The lack of economy of scale is likely to limit FLNG projects to small-scale and remote developments as it competes for buyers, financing and partners in a busy LNG marketplace.

“FLNG has established itself as a credible development option and - with further experience and cost reduction - further projects may quickly appear in an otherwise quiet FLNG FID outlook.”

Floating Production Week delivers unrivaled overview, insight and analysis to the Offshore Floating Production Systems and Technology market

Floating Production Systems Report And Online Database

  • Monthly reports -- Our monthly reports provide a detailed snapshot of the business sector as of the middle of each month. More than 80 pages of data and industry analysis each month. Excel spreadsheets with each report enable subscribers to tailor the data presentation to their needs. In October of each year we provide a detailed five year forecast of production floater orders. In March of each year we fine tune the forecast and make revisions as needed.
  • Online database -- The online database is updated every day – with information direct from primary sources. In the database are details for 240 planned projects, 370 installations in service, 70+ floaters on order and 20+ floaters available. The database is fully searchable. Customized charts and spreadsheets can be directly produced from the database.
  • Customer support -- We are available to assist with technical questions about information in the database and reports -- and assist with any questions about using the database search tools.

Here's what you get!

Request Free Trial