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LNG World Shipping

LNG World Shipping

Asian importers and exporters drive LNG industry forward

Wed 04 Apr 2018 by Mike Corkhill

Asian importers and exporters drive LNG industry forward
The robust year-on-year growth in LNG volumes handled by Korean terminals in 2017, at 10.8%, surprised many in the industry

Asia has been the focus of the industry’s greatest investments in LNG import and export infrastructure in recent years. Importers show no sign of taking their foot off the gas  

Five of the world’s top 10 LNG exporters in 2017 are located in the Asia-Pacific region while all five of last year’s leading LNG importers are Asian nations. 

Asia continues to dominate the global trade in LNG, with over 70% of seaborne cargoes discharged at the region’s terminals. Furthermore, the East of Suez importers look set to dominate the growth charts for the next decade, with new terminals in southeast and south Asia adding to the LNG volumes destined for the worldscale terminals of the north Asian powerhouses of Japan, China, South Korea and Taiwan.

Importers par excellence

The world’s leading LNG importers are Japan, China, South Korea, India and Taiwan, in that order. Japan has been the foremost buyer of LNG since the early 1970s and, although the country’s gas market is relatively mature, LNG imports in 2017 rose for the first time in three years, climbing by 2.3% to 83.6M tonnes.

Japan’s nuclear reactors were shut for safety checks and possible upgrades following the devastating earthquake and tsunami of March 2011. The number of reactors defined as operable has been reduced from 55 to 42 in the interim and, of these, only three have been allowed to restart so far. 

More nuclear plants are due to recommence operations over the next few years, easing pressure on LNG imports. However, Japanese LNG purchases are not expected to slip much due to the advantages offered by clean-burning natural gas in the nation’s fuel mix.

China has been rising through the ranks of the world’s LNG importers in recent years, passing South Korea in 2017 to become the second-largest buyer of the product. Imports climbed by 49% year-on-year to reach 37.9M tonnes.

The question everyone is now asking is when will China overtake Japan and become the leading LNG import nation. The oft-quoted opinion that China will achieve the No 1 status within 10 years now looks conservative. China’s monthly imports in January 2018, for example, reached 63% of the level of Japanese purchases. 

Although overtaken by China last year, South Korea’s own LNG imports showed robust growth. Cargo discharges reached 36.5 mta, a rise of 10.8% as the new, more environment-conscious government introduced measures supporting greater use of natural gas at the expense of coal and nuclear.

Taiwan achieved a similar growth rate with its LNG imports in 2017, as they climbed 11.0% to 16.3 mta. The country is currently considering adding a third regasification terminal.

Southeast and south Asia are important new focal points for LNG growth. India, Pakistan and Thailand are developing additional LNG receiving facilities while Bangladesh and the Philippines are poised to join the importers club for the first time. Elsewhere, Myanmar and Vietnam are set to announce their first import projects while Singapore LNG is augmenting its cargo-handling capabilities. 

Even traditional LNG export countries like Malaysia and Indonesia are adding to their nascent network of receiving facilities while another, Australia, is on the verge of sanctioning two floating storage and regasification unit-based receiving terminals, in New South Wales and Victoria.

India’s prime minister, Narendra Modi advocates raising the share of natural gas in the country’s energy mix from 6.5% to 15% within the next few years. If this goal is realised, India could be importing LNG at a rate of 30 mta by 2020, up from 19.7 mta in 2016. Eleven new Indian LNG import terminals have been proposed, to add to the existing four, and several are under construction. 

The growing LNG demands of Asian buyers are expected to prompt final investment decisions (FIDs) in several new LNG projects worldwide in 2018. Green light possibilities this year are the Mozambique, Equatorial Guinea FLNG, LNG Canada, Golden Pass and Jordan Cove projects, as well as expansions of the PNG LNG, Qatargas, Sabine Pass, Corpus Christi and Sakhalin II liquefaction facilities.     

Export leaders

The five leading Asia-Pacific LNG exporters are Australia, Malaysia, Indonesia, Russia and Papua New Guinea, in that order. 

In 2018 Australia will be commissioning the Ichthys LNG and the Prelude FLNG facilities, the last of the seven new export projects mounted down under in recent years. Australian LNG exports reached 56.8M tonnes in 2017, a 26.3% jump on the previous year. Overseas shipments are on track to reach 85 mta by 2020 which would propel Australia past Qatar to the top of the LNG exporters league table.

Malaysia boosted LNG exports by 7% in 2017, to 27.1 mta. During the year the country commissioned the ninth train at its Bintulu export complex in Sarawak as well as PFLNG Satu, the world’s first floating LNG production (FLNG) vessel. PFLNG Satu was responsible for five of the 443 LNG cargoes that Malaysia dispatched to world markets in 2017.
 
Malaysia has one other LNG production project underway. This is the country’s second FLNG scheme and will use a 1.5 mta vessel positioned on the Rotan field 240 km off the coast of Sabah. Samsung Heavy Industries is building the floater which is due for July 2020 completion.

Indonesia commenced LNG exports in 1977 and by 1984 had overtaken Algeria to become the world’s leading supplier of the product. In 1988 shipments from Bontang and Arun, the nation’s two liquefaction plants at the time, accounted for almost 40% of the global trade in LNG.

Indonesian LNG exports peaked in 1999, at 28.5 mta, although the country remained the world’s leading LNG supplier until 2006 when Qatar took on that mantle. Since then declining production at Bontang and Arun has been matched by output from the new 7.6 mta Tangguh and 2 mta Donggi Senoro terminals.

Indonesia’s LNG production in 2016 was 19.9M tonnes, of which 16.7M tonnes, or 84%, was exported and 3.2M tonnes shipped to domestic terminals. The country’s LNG output is expected to remain stable until at least the early 2020s, and probably for considerably longer. The commissioning of a third 3.8 mta Tangguh train in 2020 will help maintain the nation’s production levels. 

Until the recent commissioning of the Yamal project in the High Arctic, the Sakhalin II plant on the Pacific island of Sakhalin was Russia’s sole LNG liquefaction plant. The two-train facility has consistently produced above its nameplate capacity and output in 2017, at around 10.5M tonnes, was no exception.

Sakhalin Energy, the facility’s operator, is currently weighing up the possibility of adding a third train. The project, if it goes ahead, would require the addition of two further storage tanks to complement the two in place.   

Papua New Guinea is the fifth largest Asia-Pacific LNG exporter. The country’s two-train, US$19Bn PNG LNG terminal in Port Moresby was commissioned in 2014 and has consistently been able to make 1.3 mta of output over and above its 6.9 mta nameplate capacity available to customers worldwide.

Additional gas reserves are available in Papua New Guinea and an expansion project is currently being developed for PNG LNG that would utilise the extra supplies. The plan calls for the construction of three additional trains with an aggregate capacity of 8 mta at the Port Moresby terminal.

An FID on the expansion project is scheduled for 2019, to enable the new volume to begin flowing by 2023-24. The principals are confident that the additional 8 mta of LNG output at the PNG LNG terminal can be secured at a cost of around US$13Bn.

Our LNG Ship/Shore Interface Conference in Singapore in June promises to offer further insight into the  challenges of optimising ship and terminal operations at the jetty, offshore and bunker station.

 

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