WoodMac: FLNG market’s outlook ‘bullish’ with Africa at the core of ongoing boom

As the economic and geo-political conditions fall into place, the outlook for the global floating liquified natural gas (FLNG) project sector is buoyant, based on a new report by Wood Mackenzie, a global insight business for renewables, energy and natural resources. This report shows that the FLNG sector is thriving and ready for new capacity with Africa positioned to be at the heart of this growth.  

Wood Mackenzie’s ‘Global FLNG Overview 2023’ points out that 8.5 million tonnes per annum (mmtpa) of FLNG capacity was sanctioned in 2022. This indicates that investor interest in FLNG is back after several years in the project doldrums.  

Fraser Carson, Senior Gas Research Analyst at Wood Mackenzie, commented: “There is 12.5 mmtpa of FLNG projects currently under construction and by 2026, almost 25 mmtpa of floating supply will be operational. With international oil companies (IOCs), upstream producers, and midstream specialists all moving projects towards final investment decisions that could push capacity even higher by 2030.”  

According to the report, lessons have been learned from the FLNG sector’s chequered history with issues around cost overruns, project delays, and reliability all seeing – what is considered to be – major improvements over the last few years.  

“After a stuttering start, FLNG is proving to be a reliable commercialisation option. The utilisation of FLNG facilities in Cameroon and Malaysia have been strong over the last year, with the units producing at close to or above 100 per cent of available capacity. FLNG is removed from these above-ground risks such as armed insurgency and infrastructure sabotage. It offers producers a flexible solution to existing challenges,” added Carson.

Furthermore, the report highlights Africa as the centre of the current boom in FLNG projects as several resource-rich countries look for solutions that would allow them the option of exporting any gas not utilised on their respective domestic markets.  

The report also underlines that within the last year, FLNG developers, Eni and Perenco, have sanctioned a two-phase floating development in Congo and a barge-based project in Gabon, respectively. In addition, other projects in Africa that are being considered entail utilising FLNG to access Nigeria’s stranded offshore volumes, while in East Africa, FLNG continues to be linked as a potential development option for the Rovuma project in Mozambique.  

“Despite the bullish outlook, FLNG is not without risks. We estimate that up to 20 mmtpa of new FLNG capacity will be sanctioned over the next two years and this will primarily be developed in markets where there are concerns of cost blowouts, scheduling delays, and security risks,” concluded Carson.