TOKYO: Record investments of $50 billion have turned 2019 into a banner year for liquefied natural gas (LNG), with Canada and the US being the main drivers, the chief of the International Energy Agency (IEA) said on Thursday.
The industrial sector is Asia’s biggest driver of LNG growth, with China expected to overtake Japan as the world’s top importer of the fuel in five years, said Fatih Birol, the agency’s executive director.
“This year, 2019 already broke the highest amount of (final investment decisions) for the first time ever, $50 billion,” he told the annual LNG Producer-Consumer conference in Tokyo.
More than 170 billion cubic metres (bcm) of natural gas liquefaction capacity is due to take a final investment decision this year, a record far surpassing the previous high in 2005 of 70 bcm, according to the IEA.
The recent boost in contracting activity and project sanctioning follows the growing adoption of the equity offtake marketing structure, where companies have access to LNG volumes according to their equity stake, reducing the need for long-term sale and purchase agreements, the energy agency said in a new report which it released this month.
“The biggest growth is coming from China,” Birol added. “In the next five years, about one-third of global LNG demand will come from China alone.”
While LNG imports by Japan, the world’s top buyer of the super-chilled fuel, and Korea are expected to stay important, slowing growth there means the biggest contribution will be from China, Birol said.
Other Asian nations, such as Bangladesh, India, Pakistan, Thailand, are also importing more LNG.
European LNG imports will also increase as domestic gas production declines and nations diversify supply, Birol said.