As the price of crude oil
dropped from $115 per barrel in June 2014 to less than $60 in December, a new report by Wood Mackenzie indicates that the spot price of Liquefied Natural Gas (LNG) also crashed from a peak of over $20 per million British Thermal Unit (mmbtu) in February 2014 to less than $10 per mmbtu in November 2014.
Since October 12, 1964, when Methane Princess delivered the first LNG cargo to United Kingdom’s Canvey Island regasification terminal, the LNG business has expanded from a single trade between Algeria and the UK to over 400 trade routes involving 45 countries.
Also from October 1999 when Nigeria exported its first cargo through the Bonny Island plant of the Nigeria. LNG Limited, the company has since shipped over 3,000 cargoes to its customers in Europe, America and Asia, converting over four trillion cubic feet of associated gas to LNG and National Gas Liquids (NGLs) for both export and domestic uses.
The LNG produced from NLNG’s six trains had accounted for about 10 per cent of the global LNG market and this growth between 1996 and 2008 earned NLNG, the record as the fastest growing LNG produced in the world.
To strengthen global market share and possibly occupy the second-largest LNG exporter after Qatar, the country had targeted to build Olokola LNG and Brass LNG projects as well as additional train seven on NLNG.
However, rather than pushing ahead with these projects, uncertainty of the operating environment made investors to put these projects on hold.
Nigeria’s lost opportunities went else where as LNG from other countries especially in Europe’s North Sea, Indonesia, Malaysia, Qatar and Algeria got the global market and weakened Nigeria’s market share, reducing it from 10 per cent to seven per cent.
Wood Mackenzie said in its annual review released last week that as the LNG industry celebrated its 50th anniversary in 2014, the industry may have matured, but still not short of surprises.
According to the report, lower demand from Asia contributed to the crash in LNG spot prices last year by about 50 per cent. While 30 mmtpa of new production capacity took Final Investment Decision (FID) in 2014.
Wood Mackenzie’s Principal Analyst, Mr Giles Farrer, said global LNG production was up by five million metric tones per annum (mmtpa) to 246 mmtpa and overall trade was boosted by higher levels of re-exports.