Soorya Tejomoortula, oil and gas analyst at GlobalData, comments: “The global LNG sector was already witnessing an LNG supply glut and weak demand before the outbreak of Covid-19. The fall in gas prices and further weakening of LNG demand after the Covid-19 outbreak has accelerated this trend.”“The structural shift of LNG buyers favouring short-term contracts with smaller volumes can also increase the risk of FID delays and project cancellations. LNG developers typically rely on long-term contracts to secure financing for their projects.”
Already a couple of LNG developers have announced construction delays due to the impact of Covid-19. The LNG Canada project is likely to be delayed as construction personnel at the project site in Kitimat has been reduced by half to deal with possible spread of Covid-19. Pacific Oil & Gas also announced that Woodfibre LNG project construction in Canada is likely to be extended by one year mainly due to delay in arrival of components from Asia.Tejomoortula concludes: “The instances of Royal Dutch Shell withdrawing from the Lake Charles II project in the US, and Woodside Petroleum delaying Train 2 of Pluto LNG project in Australia indicates the current crisis situation has serious ramifications on the upcoming liquefaction projects.”
For the latest refining and petrochemical industry related videos, subscribe to our YouTube page.