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Strong LNG Growth Seen Through Decade

The liquefied natural gas (LNG) business is poised for a period of strong growth through the rest of this decade, with capital expenditures worldwide totaling nearly $67 billion, according to a report released Thursday by energy analysts Douglas-Westwood.

Annual expenditures on LNG facilities is forecast to increase "dramatically" to $17.5 billion in 2009 from the $7.2 billion spent in 2004, according to "The World LNG and GTL Report."

"We forecast that some $31 billion will be spent on constructing a total of 27 new liquefaction trains while nearly $14.5 billion is expected to be spent on 37 new import terminals (including eight offshore) and six expansion projects," said Steve Robertson, who authored the report.

"By 2009 the LNG carrier fleet is expected to number over 300 vessels and the total cost of the new-build vessels over the next five years is expected to exceed $21 billion," he said. And, despite the "unprecedented levels of demand," intense competition between Asian LNG shipbuilders (particularly those in Korea and Japan) is expected to keep prices for LNG carriers steady.

"A significant push to achieve economies of scale is evident throughout the supply chain," said Robertson. "New liquefaction process technology will see train sizes of nearly 8 million metric tons a year being achieved over the forecast period, whilst the current order book shows that the largest LNG carriers will take a leap in size." He said even larger vessels are expected to service new projects in Qatar.

"Declining domestic gas production has created a need to construct additional import capacity in North America and many parts of Western Europe," he said. "Attempts to site new terminals onshore are being made increasingly difficult by local opposition to such plans, despite the excellent safety record of the LNG industry. As a result we are seeing a diverse range of proposals for offshore terminals and we expect eight such terminals to come to fruition over the period to 2009."

The report is based on analysis of data contained in "The LNG & GTL Projects Database," which is managed by Douglas-Westwood and OTM Consulting. OTM's Annie Hairsine, who manages the data service, said that "the identified prospects on our database reveal an enormous potential for growth in the LNG sector. For instance, the capacity of all the prospective LNG liquefaction trains for the 2005-2009 period amounts to some 191 million [metric] tons a year of additional output. While it is inevitable that not all of the prospects will go ahead on time, and some will not go ahead at all, the outlook seems very positive."

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