New LNG Projects Offsetting Some Supply-Side Issues, Study Finds

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

A study from the Oxford Institute for Energy Studies finds Middle East supplies are limited because of damage from the war in the Middle East. At least some of that could be offset by developments in North America.

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Sharp Fall in Middle East LNG Output

New projects that either started up, or are slated to start up, are taking some of the pressure off from the supply-side pressures stemming from war in the Middle East, a report from the Oxford Institute for Energy Studies found.

"The effective closure of the Strait (of Hormuz) led to a sharp fall in LNG exports from Qatar and UAE," the Oxford Institute for Energy Studies (OIES) said in a report published last week.

War in the Middle East that began in late February with joint U.S.-Israeli airstrikes is taking a toll on the global energy sector. There were tentative signs of a breakthrough by way of a memorandum of understanding between Iran and the U.S. government, though that's since expired. And amid troop turnovers and low military supplies, the United States has turned to economic leverage in an effort to end the stalemate.

But the war has caused lasting damage to the global energy sector. QatarEnergy has declared force majeure on some exports of liquefied natural gas (LNG) because of damage incurred during the early stages of the war.

It could take as long as five years for the Ras Laffan North and Ras Laffan South facilities to fully recover, with a reconstruction price tag of around US$26 billion.

Industrial Info Resources offers more information on these facilities in its Global Market Intelligence (GMI) Oil & Gas Plant Database, where readers can find details in plant profiles of Ras Laffan North and Ras Laffan South.

Elsewhere, Industrial Info Resources data show two grassroot LNG projects in the United Arab Emirates that combine for US$10.5 billion in total investment value. Both are controlled by the gas arm of the Abu Dhabi National Oil Company (ADNOC). View the project reports here.

Based on OEIS estimates, combined deliveries from Qatar and the UAE averaged 63 billion cubic feet per month over the three months ending in July, which represents a loss of 250 billion cubic feet per month over the same period last year.

North America Offsetting Some War-Time Losses

That said, OIES pointed to new projects such as Plaquemines in the United States and LNG Canada as helping to offset some of the war-related losses.

Of those, LNG Canada last year became the first facility of its kind in North America that can deliver LNG from the Pacific Coast. Part of the nationwide effort to shift away from the heavy trade dependence on the United States, it's been sending out steady volumes from the coast of British Columbia since last year.

In the U.S. south, it was the Plaquemines facility in Louisiana, operated by Venture Global that supported new commercial volumes this year. Industrial Info Resources data show the facility can handle 3.85 billion cubic feet per day (Bcf/d) in feed gas, making it the second-largest LNG export terminal in the United States, after Sabine Pass in Louisiana, operated by Cheniere Energy.

OIES noted that supplies were still tilted slightly toward the downside, however. Outside legacy producers such as the United States and Qatar, "the rest of the world" added 240 billion cubic feet per month to supplies between the May to July period, for a net loss of only 10 billion cubic feet per month, or some 330 million feet per day.

In its NATGAS Today report for Monday, Industrial Info Resources showed feed gas to the functional LNG terminals running at around 16.7 Bcf/d, well below late 2025 peaks above 19 Bcf/d. The expected increase in U.S. natural gas production is not expected to keep pace with LNG exports.

By the Numbers

• $10.5 billion in total investment value for two LNG projects in the UAE
• $26 billion to resolve war damage to Qatari LNG infrastructure

Key Takeaways

• The pressure on the LNG sector may be easing, study finds.
• North America is doing a lot of heavy lifting in deliveries of the super-cooled gas.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).