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How the LNG Industry Is Creating New Business Opportunities
Posted by Insightlink on 08/30/22
The liquefied natural gas (LNG) industry was seriously hit by low prices and oversupply before and during the pandemic. Industry experts explained this to be a result of new projects in and around the industry growing at a bigger capacity than the steady demand growth.The pandemic exacerbated market volatility by reducing the global demand for gas, dwarfing supply chain optimization efforts, and precipitating a prolonged period of low oil prices. However, things have started looking up for investors in the industry.
The long-term outlook for LNG is brighter in the post-pandemic world than it has ever been. The key reason for this is that LNG has lower emissions, has better capital efficiency, and is more sustainable than other fossil fuels. On top of having a notable competitive advantage, the LNG industry can also bank on its reliability of supply for consistent growth in an unpredictable post-pandemic market. This growth is expected to open up new exciting business opportunities for both new and existing investors. Some of these opportunities are:
1. Laying the ground for LNG’s future boom
Economic activity in the LNG sector is expected to hit over $1 trillion by 2050, with jobs in excess of 100,000 created in the process. The groundwork for the expected LNG boom has already started in different parts of the World. In B.C., for example, the groundwork had already consumed about $3 billion in 2021. The biggest chunk of this money has gone to businesses that supply the LNG sector with items such as construction materials (gravel, rocks, sand, etc.), food supplies, medical expertise, scientific research services, transportation services (including maritime and trucking services), environmental monitoring services, and security services. Professionals who have benefited from the LNG preparations are surveyors, caterers, janitors, constructors, electricians, carpenters, and mechanics, among others.
The bottom line is that there is a lot of foundational work that needs to be done in preparation for the rampant growth that the LNG industry is expected to experience in the coming years. It is up to investors to position themselves well and grab opportunities that arise.
A leaf to borrow is the strategic acquisition of AG&P by Joseph Sigelman who integrated gas-related and LNG-related projects into his company. Or the strategic move of Eni, who signed the partnership agreement for the creation of the new Joint Venture with QatarEnergy; expanding Eni’s presence in Middle East and gaining access to a world leading LNG producer and detaining among the largest natural gas reserves in the world.
2. LNG is opening up difficult-to-reach areas
LNG as a fuel source has many properties that make it attractive. First of all, it is reasonably priced, which makes it easier for investors to take huge gambles with it. The bigger the gamble, the bigger the reward. Secondly, it can be easily transported, so investors can easily transport it to remote locations and other difficult-to-reach areas. That’s unlike other fuel alternatives that can only serve areas with access to pipelines.
3. Lowering operating expenses
When fuel is inexpensive and efficient, users are able to cut down on operating expenses. Low operating expenses boost profitability and competitiveness, which in turn help businesses to unlock new potentials.
4. Faster market access
LNG-based energy production as we know it now is a time-consuming process. The process particularly gets tedious due to the extremely sluggish permitting processes, on top of extensive infrastructural requirements. But investors have a reason to get excited thanks to solutions such as FSRBs that enable faster market access. Floating Storage and Regasification Barges (FSRBs) are temporary, much faster LNG production alternatives to the traditional land-based facilities. FRBs open up exciting new possibilities for investors in the LNG market.
With faster production market access, LNG will now become a more reliable alternative to oil and other traditional fossil fuels. It will become more available and, in the long run, cheaper than other fuels. Remember that LNG isthe most efficient and most sustainable fuel option in the market today.
Because LNG is not overly dependent on the weather as other renewable energy sources, it will soon become the most ideal energy option to cover demand peaks around the year. This will minimize energy downtimes in the business world, foster business growth, and open up new business opportunities.
5. Boosting tourism
With the LNG market growing so rapidly, ports around the world have started building designated LNG terminals and regasification facilities. This move is bound to increase ship traffic to these ports, which will then stimulate the economy around the ports and attract both local and international tourists.
Gas will forever be an integral part of sustainable business growth. LNG is slowly finding its space in the larger energy industry, especially by offering businesses better reliability, flexibility, and profitability. The deeper LNG gets entrenched in the global energy sector, the more jobs and business opportunities we can expect it to open up.
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