Caspian Report - Issue: 08 - Fall 2014

MATTEO VERDA
40
for transport vessels to 103 units.
In 2014, 26 deliveries are expected,
confirming the trend of transport capacity
expansion.
LNG LIQUEFACTION AND REGASIFICATION CAPACITY
WOULD BE USELESS WITHOUT ADEQUATE TRANSPORT
CAPACITY.
As a whole, despite representing
a potential criticality, enough vessels
are currently available and
their number is consistently growing.
Therefore, the availability of
transport capacity is unlikely to be
a major barrier to the development
of the LNG trade during the current
decade. Considering that it usually
takes approximately three years for
a vessel to be delivered after it is
ordered, for the next decade, much
will depend on the actual timing of
the expansion of future LNG liquefaction
plants and the signals that
shipping companies receive from
the day-rates.
To sum up, from the infrastructural
perspective, the key driver of the
expansion of the market will be the
commissioning of new liquefaction
capacity and its timing, while transport
and regasification will represent
a relevant but secondary factor.
However, from a broader perspective,
the most important element in
understanding the evolution of the
LNG market will remain final demand.
CHINESE DEMAND: THE KEY
DRIVER
East Asia will represent the core
final market for LNG in the future.
However, a major shift is underway:
while current demand is coming
mainly from Japan and South Korea,
new demand will come from China
and, to a lesser extent, India. In 2013,
China imported 47 bcm of gas, of
which 25 via LNG: less than a quarter
of the Japanese imports. 4 However,
according to the base scenario
proposed by the International Energy
Agency (IEA), Chinese natural
gas imports will be nearly 130 bcm
in 2020 and more than 200 in 2030. 5
LNG will represent a sizeable share.
Long-term forecasts are usually a
very difficult, and subject to a high
level of uncertainty, but the trend
is clear: China’s final demand of
natural gas is set to increase markedly,
as a consequence of the both
the overall economic growth in the
country and an increasing need to
limit pollution in urban areas. At the
same time, internal production will
provide a shrinking share of the final
demand, increasing dependence on
imports.
Chinese importers are investing
heavily in new capacity. Currently,
the country has an overall regasification
capacity of 59 bcm per year,
distributed across 11 terminals, the
oldest of which became operative as
recently as 2006. In 2013 alone, 4
terminals were commissioned, with
a collective capacity of 19 bcm per
year. Moreover, at least 4 terminals
are under construction, and 2 of
those are expected to become fully
operative during 2014, adding a
capacity of 7 bcm per year. Several
more terminals are at various stages
of construction and planning.
All in all, China’s infrastructural
system is gearing up for a strong increase
in LNG inflows, and Chinese
companies have already signed long-
4.
2013 consumption figures are from BP, Statistical Review of World Energy 2014.
5.
See IEA, World Energy Outlook 2013.