Enjoy Flexible Supply Deals as New-Wave of LNG Terminals Get Smaller

LNG BONNY

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Liquefied Natural Gas (LNG) export terminals conventionally have been large-scale and customised costing billions of dollars. The investment for large-scale facilities spells long-term supply deals lasting over a decade. However, a new-wave in this booming sector is designed for the emerging-market buyers who wish for volumes to be smaller, and made available on shorter and more flexible contracts.

The new terminal projects are designed in a modular-style that could be blended together like Legos and are known as ‘trains’. The style is termed ‘more consistent with market conditions’ according to John Baguley, the Chief Operating Officer of Australia-based LNG Ltd. The new style allows scaling from small to mid-size liquefaction or regasification with the plants and has the potential to be expanded as and when the demand grows. The first-such liquefaction plant is under construction in the U.S. state of Georgia and would be operational by mid-year. Meanwhile, LNG Ltd. has proposed mid-scale LNG plants in the United States and Canada.

In 2008, the average contract was reportedly for around 18 years and more than 2 million tonnes per annum (Mtpa). This is said to have dropped to less than eight years and less than 1 Mtpa by 2016, with new buyers in emerging markets like India, China, and Pakistan seeking for more flexibility due to market uncertainties.

The novel liquefaction projects of North America would reportedly be built in Asia and later shipped to the United States for assembly. And, it is stated that the modular trains would produce a fraction of the LNG of a traditional train. The modular trains are expected to avoid delays and the cost overruns, which seem to have been unbending in the custom mega-projects like Gorgon projects and Chevron Corp’s Wheatstone in Australia. Meanwhile, this new-wave of terminals design is suggestive of a long-term shift in the industry.

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