The International Gas Union (IGU) published its 14th edition of the IGU World LNG report, providing a comprehensive review of the global LNG industry and markets after the most turbulent year in its history.
LNG Shipping
There were 668 active vessels as of end-April 2023, including 45 FSRUs and eight floating storage units (FSUs). The global fleet grew by 4% with the delivery of 27 carriers in 2022. Most vessels delivered last year were in the 170,000 to 180,000 cubic metres (cm) size range.
The second generation of X-DF and the new generation M-type electronically controlled gas admission (ME-GA), which are advanced propulsion systems for LNG carriers, have gained in popularity, with 146 X-DF systems across both generations and 122 ME-GA systems on the order book, making up a large share of the total 312 vessels on order as of end-April 2023.
The number of LNG voyages last year grew by about 2.7% from 2021, although the focus on energy security meant charterers were reluctant to release any excess shipping capacity and preferred to float vessels rather than release them to the market, as observed in Europe in the third quarter of 2022. As such, charter rates were driven by ton-days rather than ton-miles, hitting a peak of $250,000/ day for steam turbine vessels, $355,000/day for TFDE/DFDE vessels
and $450,000/day for X-DF/ME-GI vessels by end-October 2022.
LNG Bunkering Vessels and Terminals
In 2022, global LNG bunkering activity declined as oil-based fuels traded at significant discounts to global LNG prices. Any dual-fuel vessels that could switch to fuel oil did so. However, as of early 2023, LNG prices have once again become competitive with fuel oil, while the longer-term fundamentals of a rapidly expanding LNG-fueled orderbook and accelerating decarbonisation measures remain robust.
As a result, 2023 is widely expected to be a revival year for
the LNG bunkering market. As the global shipping fleet turns to LNG to decarbonise and adhere to stricter environmental regulations, the case for LNG bunkering remains strong. As of end-April 2023, the global operational LNG bunkering and bunkering-capable small-scale vessel fleet has reached 35 units, including both self-propelled and tug-propelled vessels and barges.
There are an additional 14 vessels on the order book, to be delivered across the globe. The typical size of these vessels is increasing over time with the average capacity of the active fleet rising to 7,700 cm by end-2022, up from 6,900 cm in 2021. The orderbook averages 9,800 cm.
Regasification Terminals
Global regasification capacity reached 970.6 MTPA across 48 markets as of end-April 2023. In 2022, the highest capacity additions were in Europe, which saw an additional 14.5 MTPA of regasification, followed by Asia Pacific with 8.5 MTPA of new regasification, Asia with 6 MTPA and Latin America with 2.2 MTPA. Of the 31.2 MTPA regasification capacity additions in 2022, more than 80% came from new terminals. Nine new terminals were commissioned globally, with an unprecedented growth in Europe.
Another three expansion projects were brought online in the Netherlands, China and Croatia. Project-specifically, the largest new capacity addition in 2022 was the 7.5 MTPA Nong Fab onshore LNG project in Thailand, followed by the 5.9 MTPA Eemshaven FSRU in the Netherlands, and the 5.5 MTPA Wilhelmshaven FSRU in Germany. Wilhelmshaven FSRU became the first LNG terminal in Germany, with terminals at another three sites planned or under construction. Germany – the largest gas consumer in Europe – rapidly developed regasification construction plans in 2022 following the outbreak of Russia-Ukraine conflict. Last year also saw the first regasification facility go live in El Salvador, with the start-up of the 2.2 MTPA BW Tatiana FSRU. Utilisation rates of global regasification facilities averaged 41% in 2022, keeping flat compared to a year earlier, which can be explained by the rerouting of the global LNG consumption toward Europe.
Many other European markets are planning a wave of LNG import terminals following heightened geopolitical tensions as they look to reduce dependency on Russian gas and strengthen energy security. Four regasification projects were commissioned in Europe in 2022: one in Germany, two in the Netherlands and one in Finland. Four terminals have come online in Europe so far in 2023, with another three terminals and one expansion kicking off construction in the
region and aiming to commission later in 2023. There has been a notable trend in Europe towards floating terminals given their ability for redeployment and speed to market compared to onshore terminals.
Floating and Offshore Regasification
As of end-April 2023, there are 44 floating and offshore terminals around the world with a total import capacity of 177.2 MTPA, accounting for around 18% of global regasification capacity. There are 16 floating and offshore terminals under construction, with total regasification capacity of 58.3 MTPA. Five new markets – Vietnam, Estonia, Senegal, Ghana and Nicaragua – are expected to emerge this year if floating terminal projects progress as planned. In the past two years, four new markets started importing LNG following the commissioning of FSRU-based terminals, including Croatia in 2021, El Salvador and Germany in 2022, and most recently as of April 2023, the Philippines.
As of April 2023, five new floating-based terminals have been commissioned so far this year, including Lubmin FSRU and Elbehafen FSRU in Germany, Inkoo FSRU in Finland, Batangas Bay floating storage unit (FSU) with onshore regasification in the Philippines, and Gulf of Saros FSRU in Turkey with a combined regasification capacity of 21.8 MTPA.
Another 12 floating terminals are under construction and planning to start up in 2023, with a combined capacity of 40.2
MTPA. India’s 5 MTPA Jafrabad FSRU and 6 MTPA H-Gas LNG Gateway have postponed their startup from previous years and may see further delays due to tight supply globally for FSRU vessels and tepid local LNG demand due to recently high and volatile prices. The Hong Kong FSRU, which was previously planned to be completed and to come online in 2022, was yet to be commissioned as of April 2023.
LNG Trade Price Trends
Global LNG trade grew by 6.8% between 2021 and 2022 to about 401.5 million tonnes (MT). The pipeline gas supply shock following the onset of the Russia-Ukraine conflict led to a surge in LNG demand in Europe, where high prices pulled marginal cargoes away from Asia. The growth in exports from 2021 to 2022 was mainly driven by the US (+10.5 MT, +15%), following the start-up of the Sabine Pass Train 6 and Calcasieu Pass projects.
The US overtook Qatar as the world’s second-largest LNG producer last year, exporting 80.5 MT in 2022 compared to 70 MT in 2021. Russia exported an additional 3.4 MT (+11.6%) in 2022, with Qatar exporting an additional 3.1 MT (+4%), as facilities attempted to maximise production in response to the high prices. Last year also saw Mozambique join the LNG exporters’ club with the first shipment from Coral South FLNG in November.
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