Many companies have been forced to delay and reschedule final invest investment decisions (FIDs) for LNG projects following the collapse in global oil and gas demand and pandemic-related worksite restrictions.
Outlined in Global Energy Monitor’s Gas Bubble 2020 Tracking Global LNG Infrastructure report, at least 11 major projects had reported new difficulties as of late June, typically citing combinations of COVID-19 disruptions, low prices and organised opposition.
The reported highlighted that for projects in earlier stages of development and not yet committed to construction, there had been a widespread pullback, including the quiet abandonment of a large number of projects.
“Overall, the failure rate for proposed LNG export terminal projects for the period 2014-2020 in 61 per cent,” the reported outlined.
As a result of the current climate, Woodside announced due to the global oil price collapse and its falling stock value, it delayed FID for the Browse LNG terminal.
In addition, the company has also delayed FID amid plunging stock market value for its Pluto LNG terminal expansion and Scarborough LNG terminal.
“The issue was more than simply a matter of inconvenience and delay, since the duration of the downturn was hard to predict and many projects were already on shaky ground due to the chronic oversupply condition of the global gas market. Moreover, the drop in demand occurred at a time when numerous projects had newly entered construction,” the report stated.
However, despite Woodside deferring FIDs on three of its major projects, it is one of three Australian companies in the top 25 LNG developers that accounts for 75 per cent of export capacity under development.
Liquefied Natural Gas and EnergyWorld also made the list as part of the three Australian companies listed.
In the past year, concurrent with the surge in projects under construction, there has been a decline in the number of projects in pre-construction stages of development.
The report outlined that the decline in the number of projects moving towards construction demonstrates the growing recognition that the industry is overbuilt.
As of May 2020, Global Energy Monitor identified 127.5mtpa (million tonnes per annum) of export projects on hold and 445.5mtpa of projects that have been cancelled or abandoned since 2014.
At least 80mtpa of export projects that previously had been progressing are now reporting difficulties such as delays in final investment decisions, often ascribed to a combination of low prices, pandemic-related workforce disruptions, and intensifying environmental opposition.