Next Generation LNG Terminals are Shrinking to Offer Greater Flexibility

Reuters reports that while the LNG market is growing year on year. LNG export and import terminals are shrinking. Indeed. the LNG sector`s next-generation infrastructure is being designed for customers looking to purchase smaller quantities and sign shorter. more flexible contracts.

LNG export terminals have traditionally been large-scale. custom-built facilities costing tens of billions of dollars. As a result. to justify the investment. they typically required equally large. long term supply deals (often lasting a decade or more).

In contrast. future projects are featuring new modular-style designs built to snap together like Legos. This allows for small to mid-scale liquefaction or regasification plants that can be expanded if and when demand grows.

These facilities. with far smaller liquefaction units – known as trains – are `more consistent with market conditions.` said John Baguley. chief operating officer of Australia-based LNG Ltd. which has proposed mid-scale LNG plants in the US and Canada.

In 2008. the average contract was for 18 years and more than 2 million tpy. By 2016. it had dropped to less than eight years and less than 1 million tpy.

These figures clearly demonstrate a departure from the traditional large-and-lengthy contracts. and a transition to the new trend of smaller and more flexible short term orders.

This impact on LNG terminal design is further evidence to suggest this will be a long term shift for the industry.



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