LNG WORLD MARKET

OUTLOOK FOR 2015

January 2015

The year should see Australia take centre stage with Australian oil and gas company Santos has also
four new export plants coming on line. But global reiterated that its 7.8mtpa Gladstone LNG (GLNG)
consumption concerns persist, notably in Asia. New project at Curtis Island would be ready to ship its

East and North Africa. In East Africa, progress must be production later in 2015.
made on export projects if they are to meet planned
start dates while US exports could start by the end of the
year. The outlook for Russia remains poor while Europe
could see something of a renaissance if the marine fuel
sector takes off.

AUSTRALIA

Waiting for the start

Australian LNG to arrive in 2015 with the timings of new

start-ups likely to be a key driver of sentiment in the
short term, in addition to changing the structure of the ASIA
domestic Australian gas market.
Demand concerns
The 8.5mtpa Queensland Curtis LNG (QCLNG) project Asian buyers will be the key recipients of new Australian
in Australia has started production although no laden production at a time when concerns are spreading over
vessel had left the plant by the start of January. Its demand from key Japanese, South Korean and Chinese
UK-based operator BG Group has said it expects the buyers.
project’s second train to start up in the third quarter.
Major Chinese customers are not expected to be very

(APLNG), its operator Origin Energy has indicated

2015, as domestic natural gas consumption will likely
remain steady.
second train in late 2015. However, as the project’s
long-term contracts do not commence until 2016, While China’s slower economic growth will be a

the course of 2015. This could tilt the market further into gas supply and comparatively low domestic gas prices as
oversupply depending on the status of demand, and with having curbed their appetite for LNG imports.
buyers likely to focus on long-term contract purchases if
State-owned buyers such as CNOOC and Sinopec are
the oil price remains weak.
also said to be looking to sign long-term gas pipeline
deals instead, following CNPC’s lead in 2014.

Smaller Chinese companies are more likely to purchase

Global markets, and especially
spot cargoes, as they aim to gain a foothold in the
country’s increasingly liberalised gas market.
LNG to arrive in 2015 with the Private gas company ENN Energy is said to be looking to
timings of new start-ups likely to purchase at least four cargoes in 2015, with one delivery
be a key driver of sentiment in scheduled every quarter. The company’s receiving
the short term. terminal in Zhejiang is due to start operations in 2016.

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 LNG WORLD MARKET OUTLOOK FOR 2015

In Japan, utilities will continue efforts to boost trading

activity, aided by changes in contract structures and with Read more
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companies seeking to become distributors and sellers,
making for greater competition and the impetus to cut
costs.
with space for up to three surplus LNG cargoes. This
Questions over Japan’s LNG demand will persist with could provide an option for re-export but is more likely to
growing belief that nuclear plant restarts will take place. be used to optimise production at Pertamina’s Bontang
Kyushu’s Sendai reactors are expected to be on line plant.
in early 2015, with Kansai Electric expected to get two
In India, a stronger economy could support the need for
reactors at its Takahama nuclear plant restarted too.
energy imports but gas companies will hope for further
Nuclear restarts, greater coal use and industrial increases in the government-set domestic price, which will
efficiencies may continue to eat away at Japanese LNG be reviewed every six months.
import demand. But an underlying economic malaise will
LNG deliveries are expected to rise next year with
also play a part with similar fundamentals likely in South
Gazprom Marketing & Trading delivering its first spot
Korea.
cargo of the year at the 10mtpa Dabhol LNG terminal by
In Singapore, the Energy Market Authority is in the mid-January.
process of short-listing companies for its next import
Successful buyers of GAIL’s 1mtpa US Sabine Pass
tranche beyond the 3mtpa awarded exclusively to BG
LNG volumes should be finalised by the end of January.
Group. Following the 31 December deadline for the first
GAIL first announced its plan to market the volumes in
round of submissions, market participants – chief among
May 2014 with a September deadline for expressions of
them being Singapore-based Pavilion Energy and Keppel
interest.
Gas – are keen to see which potential importers have
made it to the second round. GAIL is also set to launch a request for proposal for a time
swap for 4.8mtpa of its US LNG early in 2015, according
Commercial start-up of the 2mtpa Donggi-Senoro export to sources.
project on Indonesia’s Sulawesi Island is on track to start
The names of the companies who have been allocated
from October. Commissioning should, however, allow the
capacity at Petronet’s underutilised 5mtpa Kochi LNG
project to come on line during 2015’s second Japanese
terminal are likely to be revealed officially, although
fiscal quarter which ends on 30 September.
questions remain over the demand for reload operations
More than two-thirds of the LNG produced at Sulawesi from the facility.
has been sold to Japanese electric utilities for 13 years
with the remaining 700,000 tonnes per annum allocated
to South Korea’s KOGAS. While front-end engineering
design (FEED) work continues on a 3.8mtpa third train Nuclear restarts, greater coal use
as part of Indonesia’s Tangguh Expansion Project - 40% and industrial efficiencies may
of which has already been committed to the domestic
continue to eat away at Japanese
state-owned electric utility PLN – a new sales agreement
will also come into force in 2015, allocating 1.5mpta from
LNG import demand. But an
Tangguh’s existing two trains to PLN. underlying economic malaise
The state-owned energy company will start receiving will also play a part with similar
cargoes at its Arun facility, which it converted from a fundamentals likely in South
liquefaction plant to a regasification terminal. Korea.
While Arun has five storage tanks, as the regasification
terminal Pertamina only needs two, which provides it

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 LNG WORLD MARKET OUTLOOK FOR 2015

the state of Andhra Pradesh is targeting a fourth quarter

start-up. The pressure of falling oil prices
will be felt by some Middle
Pakistan’s FSRU could be an early success of 2015 with
Excelerate scheduled to install the vessel by the end of Eastern producers more than
others.
Pakistan and Qatar over long-term supply continue.

MIDDLE EAST, NORTH AFRICA

Fresh import options

LNG prices, news, analysis and
Jordan and Egypt will join the ranks of Dubai and Kuwait
real-time tracking
as North African and Middle Eastern (MENA) LNG
importers in 2015 when FSRUs at the ports of Aqaba and ICIS is your one-stop source of intelligence to optimise
returns or investments when trading LNG.
Ain Sokhna start operations over the summer.
We o fer valuable information and analytic tools to
The 160,000cbm Golar Eskimo, supplied by Norwegian help you understand and quickly identify opportunities
in a market that is continuously evolving.
shipowner Golar under a 10-year contract to Jordan, is
LNG global pricing data and news
ICIS delivers independent and highly regarded
Relentless speculation has surrounded the supply of coverage of the global LNG markets through our daily
and weekly reports. We publish the most extensive
LNG into Egypt with the Hoegh Gallant FSRU due to list of spot price assessments (22 DES, 12 FOB,
East Asia index), historical prices, charter rates and
availability, together with daily news, market alerts and
continue over an initial supply with the latest indications industry analysis.
that a deal has been struck and with Gazprom Marketing
& Trading another interested supplier. The Egyptian gas Request a sample of our LNG reports
www.icis.com/request-LNGreport

made progress in paying off debts to foreign oil and gas

companies. Expertise in the China LNG markets
Lebanon - which was at a more advanced stage in its ICIS provides unparalleled pricing and market
plans to import LNG but suffered a series of setbacks in intelligence for China’s LNG/natural gas markets.
Our reports coverage include LNG China import and
2014 - will hope to re-inject momentum behind its project. domestic prices, supply-demand data, investment
opportunities in China, local legislations and more.
Emirates LNG, a 50:50 joint venture between Abu Dhabi
sovereign wealth fund Mubadala Group and state-owned
Enquire about our China LNG reports
International Petroleum Investment Company, is planning www.icis.com/enquire-ChinaLNG

project in early 2015.

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On the other side of the Strait of Hormuz, inside the ICIS LNG Edge is our online platform that gives you a
Arabian Gulf, the state-owned investment arm of
ETAs, charterers’ data and additional functionality,
Bahrain’s National Oil & Gas Authority (NOGA) is also
allowing you to gain the most value from spot trading
aiming to progress its own 400 million cubic feet/day opportunities.
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infrastructure provider, the project is expected to move on Request a demo of LNG Edge
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to its LNG procurement phase later in 2015. This would
be in keeping with its development timeline of import

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 LNG WORLD MARKET OUTLOOK FOR 2015

Morocco is reasserting an interest in striking gas A closed tender has a deadline of the end of May which
import deals after a period of inactivity. The country would see three infrastructure providers compete for
has previously discussed the construction of an import the FLNG engineering, procurement, construction,
terminal, but currently only imports through a pipe from installation and commissioning (EPCIC) contract.
Algeria.
Across the maritime border of those Mozambican
Back in Algeria, strong fourth-quarter 2014 output could projects, the operators of Tanzania’s offshore blocks 1
bode well for the long-standing exporter in 2015 with and 2, UK-based BG Group and Norway’s Statoil, are
additional capacity available from Arzew. But the lack of expected to progress from the pre-FEED to the FEED
interest in the country’s 2014 licensing round is a concern stage of their multi-train export project in 2015.
with the pressures of rising domestic demand coming up
against Sonatrach’s aspirations to export to more distant
markets. Anadarko and Eni have both set
The pressure of falling oil prices will be felt by some their sights on an investment
Middle Eastern producers more than others. Media decision for Mozambique in the
reports suggest that Oman could introduce a tax on LNG
second half of 2015.
exports in an attempt to bring in additional income to
offset falling crude prices.

Qatar may be more sheltered from falling oil as its energy As in Mozambique, the companies are working towards
exports are more focused on gas, but Qatari sellers will the development of shared liquefaction facilities, while
face challenges from buyers to change price and demand developing their own upstream resources separately.
elements of contracts in any upcoming negotiations. Block one consortium partner Ophir Energy expects
the exploration focus in 2015 to shift towards seismic
Recent concerns raised by Israel’s antitrust authority over
acquisition and interpretation. FID for the Tanzanian
LNG export project is targeted for late 2016.
in the development of the project. In 2014, a variety of
letters of intent were signed from Leviathan and Israel’s
NORTH AMERICA

as potential customers but they will be concerned by any US-based export developer Cheniere is in focus in
possible delays. early 2015, as the company prepares to announce

EAST AFRICA

Full of export promise? expansion.

Targeted Final Investment Decision (FID) to develop the

2, is expected to come on line in the fourth quarter of

second year running in 2014, but project developers US-
based Anadarko and Italy’s Eni have both set their sights
the lower 48 states.
on a decision in the second half of 2015.

The respective operators of offshore blocks one and four,

containing combined reserves of more than 100 trillion
cubic feet, are advancing their upstream developments
separately but plan to share an onshore site in the Afungi

exports scheduled for 2019.

liquefaction in Mozambique. Eni’s FLNG FEED phase is

set to be complete by the end of April 2015.

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 LNG WORLD MARKET OUTLOOK FOR 2015

The first 18mtpa from Sabine Pass is contracted in long-

term take-or-pay agreements to UK- based BG Group, Read more
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KOGAS and India’s gas network operator GAIL.
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With final Federal Energy Regulatory Commission
(FERC) approval for the planned 13.5mpta Corpus
Christi project in south Texas received at the end of marketing oil-indexed contracts in a costly construction
December, a final investment decision is soon to follow. and development environment.
In late December, Cheniere announced a consortium of Seeking First Nations approvals, a separate process
18 banks and commercial lenders that were selected to from the government’s regulatory procedures involving
help raise the debt financing for Corpus Christi. aboriginal tribes, has proved to be a daunting challenge
for British Columbia export project proponents such as
Malaysia’s state-run PETRONAS and its 18mtpa Pacific
While the other US LNG projects NorthWest LNG proposal. PETRONAS announced a
such as Freeport LNG and delay to its final investment on its Lelu Island project,
Cameron LNG have longer-lead which was initially expected for the end of 2014.

start-up dates in 2018, gas supply Proponents are also shifting stakeholder participation,
contracts from project offtakers with the entrance of Australia’s Woodside now joining
US oil and gas major Chevron in the planned 10mtpa
are expected to be sorted within
Kitimat LNG. This could breathe new life into the
the next year. venture, given that US-based Apache has long been
seeking to shed its LNG assets and revert back to
upstream exploration and production.
While the other US LNG projects such as Freeport LNG
In eastern Canada, developers are seeking to export
and Cameron LNG have longer-lead start-up dates
both Canadian and US pipeline gas from proposed
in 2018, gas supply contracts from project offtakers
sites in Nova Scotia and New Brunswick, such as LNG
are expected to be sorted within the next year. While
Limited’s Bear Head LNG and Repsol’s brownfield
Cheniere’s commercial model designates Cheniere as
Canaport LNG terminal. While early regulatory
the procurer of gas supply, with its customers taking the
permitting has been sought, eastern Canadian projects
volumes on a free on board (FOB) basis, the other US
still must overcome hurdles in securing feedgas from
LNG contracts are structured with the offtaker taking the
either reversing pipeline flows from the US or finding
responsibility of buying the gas either on the pipeline or
adequate gas supplies in the region.
sourcing directly from a producer.

On the US west coast, the greenfield Jordan Cove LNG LATIN AMERICA
project in Oregon is also expected to announce its final
investment in early 2015, should final federal regulatory Leading in FLNG
permits fall into place. The year 2015 will bring the initiation of Latin America’s
The single-train export project in Oregon has yet to sign second LNG export project, with Pacific Rubiales’
a formal sales and purchase agreement with an offtaker, 0.5mtpa Caribbean LNG liquefaction plant in Colombia
but multiple companies have been named as potential expected to come on line in the second half of the year.
buyers, including commodity trading companies, portfolio The project, which has been developed alongside
LNG sellers and Asian customers. Belgian shipping company Exmar, is the first in a wave
Jordan Cove is expected to receive its final FERC of floating liquefaction projects.
approval by the first quarter. But other timelines may Gazprom Marketing & Trading finalised a four-year sales
become elongated, particularly as Western Canadian and purchase agreement for offtake from the plant at the
projects are still trying to find their best footing in end of December.

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ICIS accepts no liability for commercial decisions based on the content of this report.
 LNG WORLD MARKET OUTLOOK FOR 2015

Another project expected online in 2015 is Uruguay’s 2015. The quantities needed will likely depend on
GNL Del Plata LNG import terminal. The facility will be the progress of negotiations with Uruguay, as well as
commissioned in July 2015, with the GDF SUEZ Neptune temperatures leading into the country’s peak winter
acting as a bridging vessel before a purpose-built, demand season from May-September.
263,000cbm capacity FSRU provided by GDF SUEZ and
Further spot LNG demand from Mexico is, however, not
Japan’s MOL shipping company arrives in 2017.
anticipated for 2015. As the country progresses with
energy reforms, state gas company Pemex is instead
expected to advance its ambitions to develop an export
On the short-term market, terminal in the southwest of the country.
global interest will focus on the
demand of Brazil’s state gas EUROPE

buyer Petrobras. The trader has Steady infrastructure progress

acquired record volumes of LNG With global LNG production on the verge of significant
over the past three years in order increases, the interest in capacity at European
to cover soaring gas demand regasification facilities could grow in 2015. While gas
from the power sector. demand in the region remains a concern, especially
because the outlook for the gas-fired power generation
sector is weak, LNG suppliers may need additional
flexible delivery options to offload cargoes.
The import project will be Uruguay’s first, providing gas
to domestic power plants as well as consumers in the Poland’s Swinoujscie import terminal is expected to be
country’s capital, Montevideo. But the 10 million cubic operational by the second half of 2015 after various
metre/day send-out capacity will be over double the delays. But the renegotiations of PGNiG’s contract with
country’s maximum demand, and will likely lead project Qatargas means cargoes previously destined for Poland
developers, state oil company ANCAP and power utility can be sold into other markets in 2015 instead
UTE, to sell excess volumes to neighbouring countries.
In France, the planned 13 billion cubic metre (bcm)
An agreement with Argentina’s state oil and gas producer year Dunkerque LNG terminal is scheduled to begin
YPF is anticipated early next year, while talks with commercial operations in 2015. France-headquartered
Brazilian gas distributor Sulgas could also yield a supply utility EDF and energy major Total have taken 8bcm/
agreement over the course of 2015. year and 2bcm/year of regasification capacity. But
On the short-term market, global interest will focus on questions remain over where the LNG to supply the
the demand of Brazil’s state gas buyer Petrobras. The terminal will be sourced from and if more than the
trader has acquired record volumes of LNG over the past minimum required volume will arrive from the start with
three years in order to cover soaring gas demand from other terminals at a more advanced stage to cater for
the power sector. The return of rainfall over the country’s the emerging marine sector.
December-April wet season could ease demand for LNG
cargoes, as water levels at hydroelectric facilities recover
from the 12-year lows currently experienced. Petrobras
will also start negotiations to renew an existing pipeline
gas supply agreement with Bolivia’s state producer YPFB
in early 2015.

Argentina’s state gas buyer ENARSA will emerge with a

fresh supply tender for cargoes as yet unawarded for

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ICIS accepts no liability for commercial decisions based on the content of this report.
 LNG WORLD MARKET OUTLOOK FOR 2015

The use of LNG as a marine fuel remains Europe’s best

hope for growth and it should prosper in 2015 following Read more
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A second LNG jetty under development at Belgium’s
Zeebrugge terminal is specially designed to accommodate
small ships that will transport LNG to satellite terminals planned for commissioning in 2018- as well the addition
across northern Europe and is due to be commissioned in of an export train at Sakhalin-2.
the autumn of 2015.
The Far East LNG project, which is jointly planned by
The first small-scale volumes of a new contract between Rosneft and ExxonMobil, could face similar constraints.
Eni and Skangass will see the 16,000cbm Coral Energy FIDs on the Sakhalin-2 expansion and Far East LNG
lift from Zeebrugge on 2 January. are both due in 2015.
LNG bunkering terminals in Hamburg and Bremerhaven The NOVATEK-led Yamal LNG project could continue to
are to commence operations next in 2015. struggle to raise finance according to schedule, which
The UK’s Isle of Grain LNG terminal is expected to offer may result in delays with first production scheduled for
truck loading facility from the summer of 2015. late 2016.

Sanctions also impact the transfer of technology.

Should US or Europe-based suppliers face constraints
regarding the export of certain equipment to Russia,
The use of LNG as a marine fuel
some of these projects will have to find a different
remains Europe’s best hope for solution which, in turn, could impact the overall cost.
growth and it should prosper in
If relations with the West over Russia’s role in Ukraine
2015 following the introduction of escalate further, more sanctions could ultimately lead
new emission regulations for the to the cancellation of at least some projects. Both
sector from 1 January. Vladivostok LNG and Baltic LNG projects top the
potential list, as the gas base for the former could be
exported to China via pipeline and economics for the
second seem more and more shaky as Gazprom would
RUSSIA be marketing LNG to customers who already receive its
pipeline gas.
A bleak outlook
Russia could face one of the most challenging financial The two pipeline deals that Gazprom signed with
periods in its recent history with stagnation hitting its China’s state-owned CNPC are likely to be prioritised
LNG sector. The economy, which is heavily dependent as both are capital intensive. However, the cost of the
on the export of commodities such as oil and gas, is Power of Siberia pipeline exceeds the capitalisation of
projected by the government to contract by as much as Gazprom. Raising over $50bn is likely to be a major
5% over the course of next year. This follows the decline challenge, particularly if revenues from the oil sector
of the national currency, restricted access to global credit continue to fall.
markets and the rapid decline in crude prices in 2014.

Sanctions imposed by the US and EU mean that

virtually all oil and gas majors in Russia will have to seek Sanctions imposed by the US and
alternative ways to finance their ongoing projects. EU mean that virtually all oil and
In the LNG sector this includes Gazprom’s proposed gas majors in Russia will have to
Vladivostok LNG, which had planned to start first seek alternative ways to finance
production in 2018, and Baltic LNG projects - also
their ongoing projects.

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ICIS accepts no liability for commercial decisions based on the content of this report.