According to a new report by IHS Markit, 2019 was a record-shattering year for the LNG industry. The report, "2019: A Year of Records for LNG," stated the numerous records are indicative of a sustained growth trend, with global LNG capacity expected to increase by more than 50 percent -- from 283 million metric tons per year (MMtpa) in 2015 to 437 MMtpa in 2020.
"The ongoing pace of new investment is especially noteworthy considering a market context of weak global prices," said Michael Stoppard, chief strategist, global gas at IHS Markit. "Not only did LNG grow at an unprecedented rate in 2019, but the industry also laid the foundations for continued strong growth into the middle of the decade."
Key records set by the LNG industry in 2019 were:
- Record levels of new investment: Final investment decisions (FIDs) for liquefaction projects were made at an extraordinary level of 70.4 MMtpa -- 40-percent higher than the previous all-time high reached in 2005 (50.4 MMtpa). The U.S., Russia and Mozambique each set individual highs for levels of annual FIDs.
- Record levels of FIDs without longterm contracts: Some liquefaction FIDs were made either without long-term contracts or were underpinned by sales to affiliates. Such "affiliate marketing" reached a record 43 MMtpa. Affiliate marketing at this scale has not been common in the LNG industry. Historically, most projects have instead secured long-term offtake contracts prior to committing to investment. By choosing to proceed without third-party contracts, projects can be developed more rapidly.
- Record liquefaction project startups: New liquefaction startups amounted to 38.8 MMtpa of capacity, narrowly surpassing the previous high set in 2009. Recent startups were concentrated in the U.S., Australia and Russia. The pace of project starts is expected to slow in 2020 to 28.6 MMtpa of capacity. The U.S. will continue to dominate in this area as it mostly completes its current wave of projects.
- New global supply leader: Australia surpassed Qatar as the top LNG exporter for 2019, reaching 80.2 million tons (MMt) relative to 72.5 MMt in 2018. Australia is expected to extend its lead in 2020 and retain its position as top exporter until 2023, when the U.S. is projected to become the largest LNG producer.
- Record European imports: Europe set records for imports each single month as well as for the year as a whole. Annual net imports totaled 87.2 MMt, which exceeded the previous record of 65.5 MMt set in 2011. Imports are expected to remain strong in 2020 due to additional new liquefaction supply coming to market. New supply in 2020 is expected to outpace Asian demand growth and therefore maintain sales into Europe.
LNG supply in 2019 totaled 373 MMt, up 11.8 percent from 2018 (39.5 MMt) . The largest increases in LNG exports came from the U.S. (37.7 MMt total, up 15.2 MMt), Russia (30.2 MMt total, up 10.1 MMt) and Australia (80.2 MMt total, up 7.7 MMt).
For more information, visit www.ihsmarkit.com or call (202) 463-8213.
