Report: LNG Project Sanction Uptick in 2018 by Andreas Exarheas...

Report: LNG Project Sanction Uptick in 2018

by Andreas Exarheas
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Rigzone Staff
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Tuesday, December 05, 2017



There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, according to a new report... as improving market conditions, tighter fiscal management and the need to invest to meet long term demand support final investment decisions.
That is the view of BMI research, which made the statement in a new LNG project outlook report sent to Rigzone.
“Given the delay to a number of projects over the last two years, there is now a backlog of developments that are close to FID [final investment decision] and are awaiting better energy market conditions to move ahead,” the report states.
“Despite a weak outlook for LNG prices in 2018 and 2019…both strengthening oil prices and better fiscal management by companies will support capital allocation to enable final investment decisions…to be taken on LNG projects in 2018,” the report continued.
In 2016 and 2017 only two FIDs were made on LNG projects globally; the third train at Tangguh LNG in Indonesia and Coral FLNG in Mozambique. Combined, the capacity of these two projects totalled 7.2 million tons.
“We have identified 12 projects with a combined capacity of 62.1 million tons (mtpa) which could reach FID in 2018,” the report said.
“Of these, we expect as many as seven to progress (22.5 mtpa), though all could reach sanctioning within the next 18 months. It is predominantly the smaller developments, facility expansions and debottlenecking projects with a lower upfront capital outlay that are more likely to proceed,” the report added.

Solid article which backs up the widely regarded perceptions from analysts & CEO's from aspiring LNG companies like ours that highlight 2018/19 as being the years the tides turn! The golden age is coming...

Of the 7 projects mentioned by BMI who predict likely to take FID in 18, i reckon the best candidates are:

Fortuna (Greenfield 2.2mt) - Highly likely to proceed as stated by JB.
Woodfibre (Greenfield 2.1mt) - FID has actually been taken but no construction date has been set.
Sabine Pass Train 6 (Brownfield 4.5mt)
Corpus Christi Train 3 (Brownfield 4.5mt)
Delfin (Floating 13mt) - Project fully permitted, low capex - capacity will be spread across 4 separate floating liquefaction vessels allowing for incremental start up.
Mozambique Anadarko (Greenfield 12mt) - Has a 2.6mt BTA with Thai PTT.
Magnolia (Greenfield 8mt)

Really doubt 7 will get across the line but who knows.

Now... because of the stronger macro environment and buyers aware that project sanctioning/new investments need to occur in 18/19 to avoid a looming gas shortage, one might assume that the total of signed BTAs might push to 30mt's or more in comparison to 2017's 20mt. If thats the case, my gut feeling is that we will sign half to 3/4s of the required 8mt depending on if Meridian is a final lock, considering our competition from worldwide projects already online + our rivals from US projects already under construction. Keep in mind though, if we get 6mt locked away FID can be taken, as stated by GV! If we don't tie down Meridian, i question/have a touch of doubt whether we can secure 27% (8mt of my estimated 30mt or say 23% if reach 35mt) of all signed BTA's this year... hope I'm proven wrong!! Either way, 2019 will guarantee absolute certainty so i'm not concerned.

May the dominoes fall in quick succession...