Global LNG Market

Overview

By 2025, global LNG demand is forecasted to increase by 215 MMtpa, representing a 6% compounded annual growth rate from 2014. Assuming a utilization rate of 85% of nameplate capacity, this implies that an average of 23 MMtpa of new liquefaction capacity will be needed each year until 2025(1). The biggest drivers of this demand increase are Europe and Asia, but Middle East/North Africa and South America also contribute.

Source: Cheniere Energy January 2015 Presentation at the Goldman Sachs Global Energy Conference

This growth in LNG demand is a function of global population growth and natural gas becoming an increasingly larger component of total worldwide energy demand. Natural gas is the cleanest fossil fuel and is therefore expected to take market share from less clean fuels like coal and oil.

Source: SBC Energy Institute October 2014 Presentation Called “Introduction to Natural Gas”

FLNGV Advantage – Filling Incremental Demand from Emerging Markets

While established buyers in Asia and Europe will certainly comprise a large percentage of overall LNG demand, we believe a key source of incremental demand will be non-OECD and emerging market nations. In fact, according to the International Energy Agency’s report entitled “World Energy Outlook 2013”, 82% of incremental gas demand is expected to come from non-OECD countries.

Source: SBC Energy Institute October 2014 Presentation Called “Introduction to Natural Gas”

FLNGVs are well-positioned to serve emerging market demand:

  1. Faster to Build: Ideal for rapidly growing markets that need to source reliable supply in a timely manner.
  2. Contract Duration Flexibility: FLNGVs can offer shorter-duration contracts which may be preferable for smaller nations seeking less burdensome commitments.
  3. Contract Size Flexibility: FLNGVs can offer smaller capacity commitments which may also be less burdensome for smaller nations.

(1) Per Wood Mackenzie’s Q3 2014 LNG Tool.