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Small scale LNG

LNG (Liquid Natural Gas) prices have dropped dramatically as market demand has failed to keep up with large scale developments in Australia, Papua New Guinea and a surge of US shale gas. Supplies of LNG are on course to increase by 50 percent between 2014 and 2021 putting further downward pressure on prices which are currently around $3.21 per MMBtu (million British Thermal Units) compared with $16 MMBtu in 10 December 2014.

LNG developments in Qatar, Australia and Nigeria are typically mega-sized, reliant on economies of scale, and long-term supply contracts. For example, Nigeria’s 22 million metric tonnes (MMT) per year, Bonny Bay Island Liquefaction export plant, supplies national gas networks in Portugal, Turkey, France and elsewhere. Likewise, LNG importing markets, South Korea and Japan, take large quantities under long-term fixed price contracts. Traditionally, size is everything in LNG production  and purchase. For example, the UK imports LNG into its gas grid via the LNG regasification facilities each with annual capacity of 15 MMT at the Isle of Grain and South Hook.

By contrast, small-scale LNG refers to the direct use of LNG in its liquid form rather than in the traditional format of regasification and later delivery into the gas transmission grid of a country. Small-scale receiving liquefaction facilities have a processing capacity of less than 500,000 MMT per year, enough to service a small number of large customers beyond existing gas pipeline supplies such as remote factories or off-grid power plants,  or those requiring liquid fuel  for their ships, barges, trains and buses. Read more

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