LNG
Feature Articles
Top Upcoming LNG Projects
April 2021
There are numerous LNG projects expected to commence operations around the world in the coming years. These projects have been initiated to meet an anticipated strong demand for cleaner-burning fuel.

As governments open up development opportunities, and companies invest heavily in new areas, a wealth of potential has opened up.  The following are some of the biggest upcoming LNG projects based on their processing capacity in millions of tons per annum (Mtpa).

 

Qatar LNG Expansion 

Qatar Petroleum (QP), the world’s top liquefied natural gas supplier, has made FID for the first phase of its North Field 32Mtpa LNG project expansion, aiming to boost the country’s LNG output by 40% a year by 2026. The expansion, which will take Qatar’s LNG production capacity to 110Mtpa from 77Mtpa, is the largest single LNG project ever to be sanctioned. 

QP has signed a contract covering major onshore engineering, procurement, and construction (EPC) at the expansion project, with a joint venture between Chiyoda and Technip. Production from that phase will start by the December quarter 2025 and reach full capacity by late 2026 or early 2027.   The total cost of the project will be US$28.7bn, making it one of the industry’s largest investments in the past few years and largest LNG capacity ever built.

A second phase, known as the North Field South project, is expected to lift Qatar’s LNG production capacity further to 126Mtpa by 2027.  At a long-term breakeven price of just over US$4/MBtu, Qatar’s LNG production is at the bottom of the global LNG cost curve, alongside Arctic Russian projects.

 

 

Driftwood LNG

Driftwood LNG, owned by Tellurian Inc., is developing an LNG production and export terminal on the west bank of the Calcasieu River, south of Lake Charles, Louisiana. Once complete, the terminal will be able to export up to 27Mtpa. AME expects the FID and construction work on Driftwood LNG will start in the second half of 2021. The first phase of Driftwood is expected for operation in 2025. The project investment is estimated to be around US$16.8bn. Driftwood LNG export project aims to capture the growing market for additional liquefaction capacity, as countries like China and India shift power generation away from coal-fired plants, and the demand for the fuel rises worldwide.

Driftwood was delayed together with numerous projects in North America over the past two years, as customers were unwilling to sign long-term deals needed to finance the projects while natural gas prices plunged.  The pandemic caused gas prices in Europe and Asia to drop to record lows below US$2/MBtu, while US gas prices fell to their lowest in 24 years.  Global LNG demand is on track to increase by around 200Mt over the next seven years, it hit a record high of 360Mt in 2020.

 

Rio Grande LNG

The Rio Grande LNG (RGLNG) project is located in Brownsville, Texas, the project is estimated to cost more than US$15bn. BECHTEL, has been awarded the EPC contract for the first phase of the project. The project also includes construction of a feed gas pipeline, which will be built and operated by Rio Bravo Pipeline, another subsidiary of NextDecade.

In May 2020 NextDecade pushed back FID for RGLNG citing COVID-19 lowering demand and prices for LNG as the key factor in the decision to postpone the FID from 2020 until 2021 in order to cut costs.  The terminal, which is scheduled to be commissioned in 2023, will comprise a total of six liquefaction trains, each with a capacity of 4.5Mtpa.

 

Nikiski LNG 

The Nikiski LNG project is a 20Mtpa liquefaction plant that will be built in Nikiski, Alaska, US, as part of the US$45bn integrated gas infrastructure development project the Alaska LNG project, which is being developed by the Alaska Gasline Development Corporation (AGDC). The integrated gas project will also have a gas treatment plant in Prudhoe Bay and a 1,287km long pipeline to transport natural gas from the North Slope to Southcentral Alaska.

Currently in the approval stage, the US$13bn Nikiski liquefaction plant will have three LNG trains, each having a capacity of 6.7Mpta. It will also feature two storage tanks with a capacity of 240,000 cubic meters, terminal facilities and marine services, and two loading berths to station LNG carriers up to 217,000cm. The plant is expected to target the growing Asia Pacific LNG market.

In August 2020, the US Department of Energy issued the project with a final license for LNG exports to all countries, including those without U.S. free trade agreements.  Nikiski is backed by oil and gas giants BP and ExxonMobil, which signed a pact with AGDC in March 2019, to help in moving it forward. As of January 2021, the project was still awaiting an FID, which is expected to come sometime in 2021. The expected start year was pushed back to 2025.

 

Arctic LNG-2

The Arctic LNG-2 project, to be located in the Gydan Peninsula in northern Siberia, Russia, will be developed by Novatek. The US$21bn LNG project will comprise three liquefaction trains, each with a capacity of 6.6Mtpa. Feed will be sourced from 7 billion boe of resources estimated to be held in the Utrenneye onshore gas and condensate field. Saipem and Turkish firm Renaissance hold a US$2.6bn onshore EPC contract for the Arctic LNG-2 project, which is expected to begin operations in 2023.

In 2018, Total signed an agreement with Novatek to acquire 10% direct working interest in Arctic LNG-2 project, that raised Total's overall share of the project to 27.1%, including its interest in Novatek.  FEED was completed in October 2018 and FID was made in September 2019.  The project remains on track for a 2023 start of the first train, with subsequent trains to be added over the following two to three years, to 2026. The consolidated contract value to TechnipFMC for Arctic LNG-2 was US$7.6bn.

 

LNG Canada

The LNG Canada project is a major liquified natural gas (LNG) project currently under construction on the west coast of Canada. It's expected to deliver its first LNG shipment before the middle of the next decade. The project comprises 4 trains which will be constructed in two phases.  It is the largest LNG development proposal for Canada. Phase 1 is a two train, 14Mtpa facility. On completion the total project production capacity of 26Mtpa is expected to cost between US$31bn and US$35bn.

Located at Kitimat, British Columbia, the project received its FID and its construction is expected to take four to five years.  The project is owned by operator Shell (40%), Petronas (25%), with CNPC (15%), Mitsubishi (15%) and Kogas (5%). Kitimat was chosen as the ideal location for the facility due to the easy access to abundant, low-cost natural gas from British Columbia’s vast resources.  The location also benefits from a relatively short shipping distance to north Asia, one of the fastest growing gas markets in the world. The shipping route is approximately 50% shorter than from the US Gulf of Mexico and avoids the Panama Canal.

LNG Canada has been dubbed the single largest private sector investment in Canadian history — however recent construction delays have clouded the LNG supply picture and raised the prospect of cost overruns. LNG Canada is a project that is unencumbered by traditional funding models but whose location implies that its business case lies in supplying eastern Asia and Pacific Coast markets.

 

Baltic LNG

Longstanding plans for the Baltic LNG liquefaction plant were finalised by Gazprom in 2019, with the project to be built in Ust-Luga, Leningrad Oblast, Russia. The proposed plant is expected to produce 13Mtpa of LNG as well as 4Mtpa of ethane and 2.2Mtpa of liquefied petroleum gases. Two liquefaction trains will be built, with gas coming from the Achimov and Vlaanginian fields of the Nadym-Pur-Taz region. Gazpom are targeting to have the first train in operation by the second half of 2023, and the second in late 2024. 

The Baltic LNG project is being delayed by lack of funding - its total cost is estimated at US$25–30bn.  The funding issue is especially troublesome for Russia, which currently lacks foreign investors. Former project partner Shell withdrew its commitment in 2019, opposing the decision to build an integrated gas processing complex instead of a liquefaction plant. Consequently, Baltic LNG is being pushed only by Gazprom itself and Russian company RusGazDobycha. In 2020, Russian state development corporation VEB.RF announced that it would not provide money from the National Wealth Fund to support the Baltic gas project and declared that other solutions should be sought, not excluding bringing in foreign partners.

AME see the Baltic LNG mega project and Gazprom's interest in its development with Russian company RusGazDobycha as a strategic foray directly targeting markets in Western Europe. This project could represent a formidable competitor into Atlantic gas markets. Significant comparative advantages for the Baltic LNG is proximity to markets, access to Gazprom's giant conventional gas fields, lower local ambient temperatures and sector experience.

 

Abadi LNG

The Abadi LNG project will be located on the Tanimbar Islands, Indonesia around 150km from the Abadi gas field, and will have a planned production capacity of 9.5Mtpa.  

Project operator Inpex (65%) and Shell (35%) received approval for a revised US$16bn plan of development (POD) for the Abadi LNG project from the Indonesian government in July 2019. The revised plans changed the proposal from a floating LNG development to an onshore development.

Inpex is currently working on necessary preparations of a FEED stage, following which an FID will be made. In 2020 Inpex began a review of its investment plans for the project because of the global oil price collapse.  One upshot of this review may be a delay on the project's FID. FID date may be pushed back from mid-2021 to mid-2022. The revised Abadi LNG project is viewed by AME as a final compromise between the operator Inpex and the Indonesian Government. The plan features a greatly expanded 9.5Mtpa onshore facility in return for a 27-year extension on the Masela PSC Gas Fields to 2048.

 

Mozambique LNG

The Mozambique LNG (MZLNG) project is the proposed LNG export terminal in the Northern Cabo Delgado province, on the Afungi Peninsula in Northern Mozambique.  Total SA operates MZLNG (after it acquired Anadarko's interest in 2019) with a 26.5% participating interest alongside ENH Rovuma Área Um, S.A. (15%), Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Ltd. (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique B.V. (10%), and PTTEP Mozambique Area 1 Limited (8.5%).

MZLNG is the country’s first onshore LNG development. The project includes the development of the Golfinho and Atum fields located within offshore Area 1 and the construction of a two train plant with a capacity of 12.9Mtpa. Offshore Area 1 contains more than 1.7Bcm of gas resources, of which 0.5Bcm will be developed with the first two trains. The FID on MZLNG was announced in June 2019, and the project is expected to come into production by 2024.

Underpinned by Mozambique's large gas reserves and the strategic location, the proposed MZLNG project is likely to go forward, even in the case of lower LNG price outlooks.  Project timing appears to favour the view that commercialisation will progress slowly, a factor that will raise the investment bar. As it stands, a 2024 start-up, while still possible, will become increasingly optimistic.

 

 

Golden Pass LNG

The 15.6Mtpa Golden Pass LNG project is under construction with the first of three trains anticipated to be in commercial operation by 2024, and the entire facility will be in operation by 2025.

Golden Pass LNG could represent one of the higher certainty LNG proposals based on its very large pre-existing site infrastructure, as well as the technical expertise and ample funding capacity of its two giant stakeholders. Given the involvement of Qatar Petroleum and ExxonMobil, AME views this project as having a high certainty for its eventual realisation.

The owners announced FID to fund approximately US$10bn Golden Pass LNG project in 2019 and the facility is expected to be operational in 2025. Operating as an LNG import and regas terminal, the original gas import business case has evaporated following the upsurge in US gas production, and self-sufficiency in natural gas. As such the natural gas liquefaction terminal can take advantage of the substantial, ready-made 775,000m³ of LNG storage, pipelines and berthing facilities, in order to capture start-up cost savings.