News & InsightsPress Releases

LNG – Key to Weaning the World off Fossil Fuels

By December 22, 2015 November 28th, 2019 No Comments

LNG – Key to Weaning the World off Fossil Fuels

Capital expenditure (Capex) on LNG facilities has risen substantially in recent years, mostly due to growth in the global economy which has been driving demand for natural gas. Douglas-Westwood (DW) forecasts that this trend is set to continue with total expenditure on global LNG facilities expected to reach $241bn between 2016 and 2020.

Research Team Leader and Assistant Editor, Hannah Lewendon, stated, “Emissions from the burning of fossil fuels has become an increasingly important considera­tion in recent decades. In light of environmental damage from en­ergy consumption, there has been movement towards the use of cleaner fuels. With natural gas only emitting half of the greenhouse gases of coal, it provides a mechanism for rapidly reducing emissions.

“With climate change having a far reach­ing implication to human health, delegates at the recently concluded COP21 climate change conference agreed on a low carbon roadmap. This will continue to support the shift towards gas as a cleaner alternative to oil & coal, with natural gas regarded as a “bridging fuel” to renewables in the future. Furthermore, tightening of environmental legislation will sensitise the transport and power generation industries in using LNG as an alternative fuel, in addi­tion to the price arbitrage effect.”

Author, Mark Adeosun concluded, “In the decades ahead, natural gas will play an increasingly significant role in meeting the world’s energy demand. The long-term potential of the LNG indus­try is evident as vast reserves of natural gas found in remote regions such as East Africa and the Arctic present considerable LNG opportunities for the future. In the short-term, a combination of low oil prices and a sharp fall in the Asian economic growth forecast has sent the LNG spot price tumbling fast, given that Asia is a vital region for demand growth. Low hydrocarbon prices remain a concern within the LNG market, as most LNG contracts are linked to oil prices.

“Therefore, the global LNG Capex outlook to 2020 will be characterised by a change in regional spend. The weaker projected expenditure in 2016 will be a result of a pause in commitments to new LNG projects. By far the largest proportion of the total expenditure will be attributed to liquefaction projects which account for 66% of spend over the forecast period. Import facilities will constitute 21% whilst spending on LNG carriers will represent 13% of total expenditure between 2016 and 2020.”