Pat Roberts and Andy Flower
2014 looks set to be an action packed year. The industry has to:
• Get through the tight short-term market (2014-2016), whilst demand is strong but new supply projects are slower than expected in starting up.
• Increase the momentum in taking Final Investment Decisions (FIDs) to ensure the growth for the longer term.
• Bring on new supply successfully: Angola needs to reach plateau, Arzew, PNG and QCLNG are all planning to start up during the year.
• Buyers need to sort through the wide choice of possible new supply projects - all of which carry different risks. Globally, around 600MTpa is under development, 60% of which is in N. America alone where, in most cases, the promoters have not previously developed or managed a liquefaction project. Elsewhere, project developers have a relentless challenge in managing increasing LNG supply costs and Greenfield project complexity in order to deliver new supply.
• Buyers and sellers need to resolve the various stand-offs there have been on long term pricing formulae – both for price reviews and for new LNG supply contracts. With respect to US LNG exports, buyers also have to make their decisions about the long term viability of Henry Hub priced LNG imports and the operational obligations of tolling contracts.
We set out below our “dashboard” of what’s planned and what is reasonably expected during 2014. It also shows our opinion of which of these activities are positive ornegative for the industry. On balance, we think there will be several positive activities happening this year
throughout the industry – so we see it as a “moving forward” year for the industry as a whole. We welcome your opinions on how you see 2014 shaping up.