Retrospect of the LNG industry in 2014

By Curious

Wood Mackenzie has prepared a retrospect of the LNG industry for the year 2014. The year was very significant for the LNG history marking the industry's 50th anniversary.

The production raised from 5 million metric tones per year (mmtpa) to 246 mmtpa and trade flows were increased by re-exports. This general trend came across some unexpected circumstances as well. The latter included lowering of the Asian demand, especially in South Korea. Imports there were cut down by nine per cent because of the mild weather conditions that resulted in more storage supplies.

In addition there was a lower demand in China too, because of the lower pace of the economic growth and policy and infrastructure obstacles. As a result, LNG spot prices fell down from a high of over US$20/mmbtu to a low of under US$10/mmbtu.

All this change happened during the period from Valentine’s Day to Thanksgiving. The downward slope evolved in two stages. The first stage was during the summer because of oversupply as a result of the new PNG LNG supply and the decline in Asian demand. The second stage was in December when the price of the Brent oil was cut down to below $60/bbl as compared with the price of $110/bbl in August.

The examination of PNG LNG’s last year’s production came to the conclusion that the company had a new growth area, reaching its maximum options from both lines in five months. The production was also rising from both Nigeria and Algeria.

The year was also important in terms of the US projects. For example Cameron, Freeport (Trains 1 & 2) and Cove Point came to FID, final investment decision, after being authorized by the Federal Energy Regulatory Commission. A precondition for that was the export policy change of the US Department of Energy in August. As a result, the FERC filing of the more progressed projects was helped. The perspective of great volumes of US exports had lifted orders to high levels-67 for the year 2014, in spite of falling lease rates. DSME got the majority of the orders.

Unforeseen effects would still be sensed across the industry for the new 2015 and beyond, especially after such a turbulent year.

Source&Inphographic: Wood Mackenzie