That
will result in somewhere between 547bn m³ and 640bn m³ of total
capacity by 2035, compared with 413bn m³ today, and will cost between
€100bn and €170bn, the French consultancy says in a new report. New
storage markets in Asia-Oceania, the Middle East and potentially Central
and South America will account for most of the growth expected by 2035.
The
lower growth rate reflects the maturity of the storage market in the
main regions. The range of future additions to storage capacity is also
much larger than foreseen in past surveys by Cedigaz, owing to
uncertainty over the availability of appropriate geology, economic and
financial constraints, and competition with alternative sources of
flexibility in the new storage regions, such as LNG imports which can
substitute for storage as peak supply.
Many
storage projects, planned for years, have not materialised and several
countries – mostly in south Asia, southeast Asia and Central and South
America – have chosen to build LNG regasification terminals instead to
provide their flexibility needs.
In
countries where the gas industry is still in its early days, storage
projects are mainly linked to seasonal and peak balancing needs,
optimisation of the main long distance gas transmission pipelines and
security of supply. Large volumes are needed but so too is peak
deliverability to cope with increasing demand.
Conversely,
in mature markets – North America, most of Europe, and the former
Soviet Union – the growth in working capacity is limited, and could even
be negative. Some plants in the European Union are being mothballed as
the economics work against them. In the liberalised markets, the gas
industry has undergone massive changes, largely impacting storage
activity which is increasingly geared to trading and managing gas price
fluctuations.
New
storage needs are linked to the development of trading activity and to
the use of natural gas as a back‐up of intermittent renewable energy in
the power sector. The focus is on increasing peak deliverability rather
than storage volumes.
The
number of LNG importing countries has expanded significantly over the
past ten years from 18 in 2005 to 35 in 2015. A wider range of LNG
supply options, flexible shipping strategies, the growth of the spot and
short-term market and floating storage and regasification (FSR)
technology, have helped a growing number of countries to become LNG
importers.
This
includes traditionally export-oriented regions, such as the Middle East
and North Africa, which are facing burgeoning gas demand, emerging
economies with growing energy needs in southeast Asia and Central and
South America, and countries seeking greater energy security and
diversification.
The
global regasification market has expanded at a strong rate, having more
than doubled in the past ten years, with capacity growth coming from
new and ‘traditional’ importers alike. The FSR technology has enabled
new countries to secure an accelerated access to the global LNG market,
while existing importers have often focused on bringing online larger
terminals with increased send-out, berthing and storage capacity. As of
beginning of 2016, 118 LNG import terminals – including 17 FSRUs –
existed worldwide. Global import capacity stood at 1,000bn m³/year at
the beginning of 2016. In 2015 alone, 11 new terminals, five of which
are FSRUs and two expansions of existing plants came online.
With
a global share of 54%, Asia is the number one region for regasification
capacity. However, its dominance has decreased notably since 2005 when
it accounted for 65% of global regasification infrastructure. Such a
decrease highlights the steady emergence of new LNG consumers. This
trend is expected to continue going forward with 20 new countries
planning to add LNG import capacities. There are 16 new terminals under
construction, of which four FSRUs. In addition, 12 terminals are being
expanded.
These
projects will add a combined capacity of over 100bn m³/year by 2018/19.
In addition, there are more than 100 potential and speculative projects
(expansions and new terminals) adding almost 600bn m³/year of import
capacity worldwide. Asia-Oceania drives the expansion, home to three
quarters of the current capacity under construction and half of the
planned capacity, but new LNG importing countries are entering the LNG
market.
The
FSRU technology facilitates this trend thanks to the lower cost of
FSRUs compared with traditional onshore plants, their shorter lead time
and less difficult permitting. At the beginning of 2016, there were 17
FSRUs in operation globally. Floating import capacity was 88bn m³/year,
accounting for about 9% of the world’s total. In 2015 alone, five FSRUs
came online and four additional FSRUs are set to start operations in
2016 and 2017.
With
41 FSRU projects under consideration globally, both the volume (a
combined capacity of 145bn m³/year) and share of FSRU capacity are
likely to increase further. Asia still dominates the planned and
announced FSRUs projects. However, 40% of the additional capacity is
outside Asia. FSRUs are particularly popular in Central and South
America, Europe and Africa.
William Powell, Editor in Chief of Natural Gas Europe