Government attempts to reduce air pollution by cutting consumption of coal in favour of natural gas are likely to be the biggest drivers of Asia-Pacific LNG demand in the near term, potentially helping absorb supplies from new liquefaction projects that are scheduled to hit the market in 2018. Three of the world's four largest LNG importers — China, India and South Korea — are aiming to boost gas consumption as part of efforts to cut reliance on coal and nuclear power for environmental and safety reasons. The three countries collectively accounted for around 30% of 2016's global LNG imports, behind the largest importer Japan. China is pushing strongly to cut coal use under its 13th five-year plan. The government is targeting a 10% reduction in coal consumption in 2020 from 2015. South Korea is calling for a move away from coal and nuclear in favour of renewables by 2030 in a new plan for the power sector. The government wants LNG to have a 27.3% share of power generation capacity by 2030, up from a targeted 14.5% in its previous power plan but down from the current level of 31.9%. India is seeking to increase the share of gas in its energy mix to 15% from around 6%, while also doubling LNG regasification capacity to 56mn t/yr in the next three years. State-run aggregator Petronet forecasts domestic LNG demand will grow by 8-10%/yr over the next few years from 18-19 million tonnes in 2016. India wants to add pipeline gas connections to 10 million households by 2019. State-controlled gas distributor Gail plans to double the existing pipeline network infrastructure by 2020, with it already having begun construction in the northeastern states.
Japan's JX Nippon Oil & Gas Exploration says Malaysian state oil firm Petronas has awarded it oil and gas rights for the Beryl gas field off the coast of Malaysia. The company says Beryl is scheduled to produce its first gas in November, 2018, with peak production seen at around 23,000 barrels per day of oil equivalent. That gas will be sold as LNG to customers, including buyers in Japan, according to the firm.
The World Bank Group Tuesday said it will stop financing upstream oil and gas after 2019, as part of a wider commitment to global efforts to halt climate change. "As a global multilateral development institution, the World Bank Group is continuing to transform its own operations in recognition of a rapidly changing world," the bank said in a statement. "The World Bank Group will no longer finance upstream oil and gas, after 2019," it said.
· The impact is likely to be largely symbolic as the World Bank is not a major financier of upstream projects. It is unlikely that local banks will follow suit. However, this development highlights the general perception that the gas industry is lumped together with the oil industry, and is viewed as a polluting industry.
In the next five years, Petronas projected that the average daily oil output would be 1.7 million barrels. It said the potential projects to be developed will be concentrated in new growth areas or new projects and maximize exploration of existing projects. The expected development portfolio between 2018-2020 for the new project is 20 projects.
· Of the new projects to be developed between 2018 to 2020, all involve the development of new facilities, of which 70 percent are gas projects This good news will ensure the sustainability of the gas industry in Malaysia.
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Many of Indonesia’s oil and gas fields, both on and offshore, are coming to the end of their commercially viable operational lifespan. More than 60% of Indonesia’s oil and more than 30% of gas production comes from late-life-cycle resources spread across the world's largest island country. Despite investment and use of enhanced oil field recovery measures, as well as increasing automation to extend the economic lifespan of these assets, decommissioning will soon become necessary.
However Indonesia, like many countries new to the prospect of decommissioning energy infrastructure, face many key technological, fiscal, environmental, regulatory and industrial capacity issues, which need to be addressed by both government and industry decision makers.
This report, commissioned by the consulting and advisory arm of London and Aberdeen based Precision Media & Communications aims to takes a look at many of the issues Indonesia and other South East Asian oil producing nations are likely to face with the prospect of decommissioning the region's oil and gas aging energy infrastructure both onshore and offshore... To find out more Click here
Headline crude prices for the week beginning 2 December 2019 – Brent: US$61/b; WTI: US$55/b
Headlines of the week
The Global Small-Scale LNG Market is projected to grow from 30.8 MTPA in 2016 to 48.3 MTPA by 2022, at a CAGR of 6.7% between 2017 and 2022. The small-scale LNG market across the globe is driven by their increasing LNG demand from remote locations by applications, such as industrial & power, and the ability to transport LNG over long distances without the need for heavy investment such as pipelines. By terminal type, regasification terminal is expected to grow at a highest CAGR between 2017 and 2022. The increasing demand for LNG from the remote locations and global commoditization of LNG are some of the major factors that are driving the demand for small-scale LNG in this segment.
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The Linde Group (Germany), Wärtsilä (Finland), Honeywell International Inc. (U.S.), General Electric (U.S.), and Engie (France), among others are the leading companies operating in the small-scale LNG market. These companies are expected to account for significant shares of the small-scale LNG market in the near future.
Critical questions the report answers:
Growth Drivers are :
Energy cost advantage of LNG over alternate energy sources for end-users
Heavy duty transport companies save approximately 30% on fuel costs on LNG-fueled trucks, compared to diesel fueled trucks, and produce 30% lower emissions. Air pollution from diesel engines is one of the biggest concerns, especially in areas that struggle to meet air-quality standards. On the other hand, natural gas causes complete combustion and fewer emissions than diesel. It is estimated that increasing environmental concerns from the utilization of diesel vehicles is likely to increase the adoption of green fuel technologies such as natural gas. In the case of electric power generation, natural gas engines below 150 KW are more cost effective than oil fueled engines. Fuel cost is one of the major cost for road transportation, which is strongly subject to excise taxation. Typically, an LNG-fueled Volvo FM truck can travel up to 600 km with LNG. With an additional 150 litres of diesel, it can travel up to 1,000 km without refuelling. Thus, reducing the cost of travel. With additional LNG liquefaction capacity expected to come online in the next few years, an oversupply of LNG is expected, which will drive the price of LNG further lower. Considering all these factors, both developed and developing countries are undertaking feasibility studies to recognize the techno-economics of shifting their economies from diesel to natural gas. Therefore, the cheap price of small-scla LNG over others alterantive fuels will drive the growth during the forecast period.
Small-scale LNG terminals are regarded as facilities, including liquefaction and regasification terminals, with a capacity of less than 1 million tons per annum (MTPA) within the scope of this study. It includes the LNG produced from small-scale liquefaction terminals and regasified at small-scale regasification terminals for catering to applications such as LNG-fueled heavy-duty transport, LNG-fueled ships, and industrial & power generation.
North America small-scale LNG market is projected to grow at the highest CAGR during the forecast period.
The North America small-scale LNG market is projected to grow at the highest CAGR during the forecast period. In North America, most of the small-scale LNG demand in industrial & power applications is met through peak shaving facilities. The peak shaving facilities are used to meet adequate supply of LNG to address the peak demand. In 2015, there were more than 100 peak shaving facilities in the U.S., among which one-half of the peak shaving facilities were located in the Northeast, while a quarter of them were located in the Midwest. Currently, the U.S. has among the highest number of peak shaving plants. However, less than 10% of them are available for any other use due to the current electricity demand. The commissioning of small-scale liquefaction plants can expand the peak shaving capacities in the region.
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