The global demand for liquefied natural gas (LNG) has experienced a remarkable surge, reaching over 360 million tons in 2020, marking a substantial 48% increase compared to 2015. Furthermore, year-on-year, global LNG trade has witnessed consistent growth of 7-9% in 2019. This soaring demand is underpinned by emerging smaller-scale applications in industrial, agricultural, and marine sectors, capitalizing on the abundant supply of affordable LNG. These developments offer significant benefits such as emissions reduction, energy security, cost savings, and diversification.
According to Royal Dutch Shell, the demand for natural gas is projected to soar to over 4,500 billion cubic meters by 2035, up from 3,600 billion cubic meters in 2018.
Small-Scale LNG Gains Momentum
Interest in small-scale LNG (SSLNG) has surged in tandem with the escalating demand for natural gas. SSLNG infrastructure, characterized by lower capacities compared to conventional LNG facilities, played a pivotal role, constituting more than 8-9% of the global LNG trade in 2020. These facilities serve isolated demand centers lacking pipeline infrastructure and are increasingly fulfilling the growing need for LNG as a transport fuel.
Low Capital Costs and Emission Regulations Fuel SSLNG Growth
The rising investment in SSLNG facilities is primarily attributed to their lower initial capital requirements compared to conventional LNG projects. This cost-efficiency allows for quicker project implementation and provides flexibility in terms of logistics and operations.
Large-scale LNG export terminals are typically situated near major gas-producing hubs, leveraging substantial natural gas resources. In contrast, small-scale LNG export terminals monetize smaller gas fields that might not be economically viable for large-scale facilities. These smaller terminals require fewer environmental clearances and can be constructed in a shorter timeframe, enabling the export of gas from smaller fields.
Exploration companies are actively investing in small-scale export terminals to utilize gas from associated fields, minimize flaring, and meet stricter fuel regulations. The International Maritime Organization’s strengthened regulations on fuel oil sulfur content and greenhouse gas emissions in international shipping are expected to further drive investments in small-scale LNG facilities worldwide.
Environmental Benefits and Market Strategies Boost SSLNG
Small-scale LNG has gained prominence due to its potential to reduce greenhouse gas emissions and sulfur dioxide levels. Other key factors driving SSLNG include price divergences between crude oil and LNG, government policies promoting gas use, and strategic market development efforts by major oil and gas companies. Maintaining LNG’s price competitiveness against conventional petroleum products remains a key challenge.
Investments in LNG Satellite Stations Indicate Growth Prospects
Small-scale LNG terminals employ various sourcing strategies, either obtaining LNG from large liquefaction plants or small-scale liquefaction units. In 2020, small-scale liquefaction accounted for a significant share of the global market. The growing demand for natural gas in transportation, industry, and power generation is a primary driver for investments in small-scale liquefaction units, especially in regions lacking gas infrastructure.
Asia Pacific: The Hub of Investment
Asia Pacific dominates the global small-scale LNG market, contributing to over 68% of LNG demand in 2020. Japan, China, South Korea, and India collectively accounted for 55% of this demand. Singapore is actively pursuing policies to become a major LNG bunkering hub, with investments in ship-to-ship LNG supply facilities and subsidies for LNG-fueled ship construction.
Europe captured nearly 25% of global LNG demand in 2020, with a strong focus on lower-carbon energy sources. The Nordic region and Northwestern Europe have embraced SSLNG as a cleaner energy option. Norway has invested significantly in LNG bunkering terminals around major trading centers, solidifying its position as a leader in small-scale LNG production and distribution in Europe.
Investment Opportunities Abound
With the shipping industry’s growing preference for LNG as a fuel, China, Europe, and the US are expected to increase their spending on LNG adoption. Investment in LNG fuelling stations is set to rise in these regions. India has also emerged as a hotspot for small-scale LNG investments, with key players like INOXCVA and Royal Dutch Shell actively participating in infrastructure development.
Key Players in the Small-Scale LNG Market
Notable companies in the small-scale LNG market include Mitsui Group, BP plc, Wärtsilä Corporation, Siemens AG, Total SA, Linde plc, GE, Petronas, Royal Dutch Shell plc, Equinor, Eni S.p.A, and Black & Veatch.
In April 2021, INOXCVA joined forces with Mitsui Group for a small-scale LNG project in India, aiming to boost small-scale LNG applications and promote a gas-based economy.
In January 2021, Royal Dutch Shell launched its first small-scale LNG supply project in India, enhancing the availability of cleaner fuel for customers in the country through a truck-loading unit at its Hazira terminal in Gujarat.
Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2023-2030 – By Product, Technology, Grade, Application, End-user, Region: (North America, Europe, Asia Pacific, Latin America and Middle East and Africa) https://www.fairfieldmarketresearch.com/report/small-scale-lng-sslng-market
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