Might makes for LNG opportunities
Pandemic-driven lockdowns have taken their toll on small companies in every sector, while larger companies can take a longer view on matters, including in the LNG sector.
Broadly, there has been a shift away from liquefaction and a new emphasis on downstream plans. This shift has also provided the larger companies with new opportunities to increase the rate of expansion into the downstream.
Price signals have highlighted how the world has changed. Henry Hub has risen, making liquefaction in the US less appealing. European prices, TTF and NBP, have fallen, in part as a result of storage levels. Asian prices have also fallen, with some markers dipping below $3 per mmBtu.
There is a previously unthinkable convergence of prices that has highlighted companies’ places on the production cost curve.
Plans for new export capacity has become less attractive, as companies reconsider investments. There is around 100 million tonnes per year of capacity under construction.
Companies approved 70.8mn tpy of capacity in 2019, a record for final investment decisions (FIDs), according to the International Gas Union (IGU). Prospects for additional FIDs this year look challenging.
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