Asia And Latin America With Most LNG-To-Power Projects
Fitch Solutions Sector Intelligence
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research. Asia And Latin America With Most LNG-To-Power Projects 01 Dec 2021 Global Oil & Gas Key View We maintain our view that natural gas generation will grow globally over the next decade, which supports our positive outlook for LNG-to-power projects. Seeing a strong push towards the expansion of natural gas power generation, Asia is also set to see a number of LNG-to-power projects. We also highlight a strong project pipeline in Latin America. We have identified a number of drivers behind the growing interest in LNG-to-power projects, including price flexibility, gas supply diversification and decarbonisation efforts. We maintain our view that natural gas generation will grow globally over the next decade, which supports our positive outlook for LNG-to-power projects. Globally, the share of natural gas in total generation is expected to grow from 23.9% in 2020 to 24.2% in 2030. The most robust growth in natural gas generation is expected in Asia, however, all regions will see a positive rate of growth. We expect that the decarbonisation of the power mix across countries, coupled with technology-driven efficiencies of natural gas power plants, will remain key drivers supporting the upward trend for natural gas. Along with more traditional pipeline gas projects, LNG-to-power projects - which usually include an import LNG facility, either an onshore terminal or a floating unit that feeds an on-site power plan - have been growing over recent years. Although the LNG-to-power market remains nascent, it shows a lot of potential worldwide, as countries pursue a transition towards more clean energy while looking for an alternative to pipeline gas. Asia To See The Largest Boost In Natural Gas Generation Global - Natural Gas Generation Forecast (TWh) f = Fitch Solutions forecast. Source: National sources, EIA, Fitch Solutions Seeing a strong push towards the expansion of natural gas power generation, Asia is also set to see a number of LNG-to-power projects. We also highlight a strong project pipeline in Latin America. We expect to see an influx of LNG regasification projects, especially in South East Asia as countries like the Philippines, Vietnam, Indonesia or Myanmar pursue a large-scale decarbonisation strategy, some switching from oil to natural gas power generation, and aim at tapping the global LNG market. Over 2020, a number of project developers announced new LNG-to-power projects across Latin America. New Fortress Energy currently develops various LNG-to-power projects across the region with two terminals - in Nicaragua and Mexico - expected to come online over Q221. The company also focuses on the expansion of LNG import terminals and on-site power plants in Brazil, to benefit from regional gas price discrepancies as in the case of the Barcarena terminal which is somehow isolated from the key natural gas pipelines or from the expected robust demand in boosting port of Suape. We also highlight projects currently under consideration in Colombia. Facing limited domestic gas supply, the country plans to tap LNG as it expands new industrial centres on its coast. We have updated the list of our key projects this quarter, adding seven new projects and providing more details and the latest news for a number of projects (see a table below). Selected LNG-To-Power Projects Country Power Plant Name Power Plant Generation Capacity (MW) Location Stakeholder Type Name Of Vessel Status Start Date Panama Costa 381 Costa Norte (Colon) AES Panama, Inversiones Bahia LNG jetty N/A Operating 2018 Jamaica Old Harbour Bay Power Plant 190 Old Harbour Bay Golar Energy floating Golar Freeze Operating 2019 Gibraltar North Mole Power Plant 86 Gibraltar MAN onshore N/A Operating 2019 Brazil Porto de Sergipe I Power Project 1,500 Barra dos Coqueiros CELSE floating Golar Nanook Operating 2020 Jamaica Jamalco Power Plant 94 Clarendon New Fortress TBC TBC Operating 2020 Panama Sinolam Smarter Energy LNG Power 411 Colon Sinolam Smarter Energy onshore Sinolan LNG Pending approvals 2022 Indonesia (Bali) Amurang County Power Plant 125 Amurang County PT PLN, Karpowership Powership Zeytan Sultan Operating 2020 Myanmar Thaketa plant and Thanlying plant 400 (Thaketa), 35MW (Thanlying) Yungon CNTIC VPower onshore Yangon LNG - 2020 Puerto Rico San Juan Power station 440 San Juan New Fortress Energy onshore TBC Operating 2020 Mexico TBC 135 Pichilingue floating La Paz, Mexico Terminal 2020 El Salvador Acajutla LNG Power Plant 378 Port of Acajutla EDP, Grupo Calleja floating BW Offshore vessel (most probably) Under Construction, Financing for the projects secured as of Jan 2020 2021 Benin Maria Gleta Power Plant now: 127, potentially expanded up to 400 Cotonou MAN floating TBC signed GSA with Total, awaits governmental and environmental permits 2021 Brazil Gas Natural Acu I 1,300 Açu Prumo, BP, Simens floating BW Magna/ Courage Under Construction 2021 Mozambique Powership in Nacala 120 Nacala MOL, Karpowership Powership (Converted former LNG carrier Dwipura to FSRU. Powership will be converted to run on LNG as opposed to heavy fuel) TBC Under construction 2021 Vietnam Hiep Phuoc thermal power 520 Ba Ria-Vung Tau Province onshore Thi Vai terminal Construction completed as of June 2020 2021 Nicaragua TBC 300 Puerto Sandino New Fortress Energy (NFE) floating Nicaragua Terminal Under construction 2021 Ghana Tema Ghana National Petroleum Corp. (GNPC) and Quantum Power floating tema LNG Terminal Under construction 2021 Chile El Campesino 600 Penco EDF, AME floating Hoegh LNG vessel Delayed 2022 Vietnam Nnoh Trach 1,500 Ho Chi Minh City PetroVietnam onshore Tibai LNG Under construction 2022 Colombia Electric Complex in Sucre Plant I 1,231 Sucre Generación e Interconexión Eléctrica del Pacífico (GIEP) floating TBC Pending approvals. 2022 Colombia Electric Complex in Sucre Plant II 1,231 Sucre Generación e Interconexión Eléctrica del Pacífico (GIEP) floating TBC Pending approvals. 2022 Brazil TBC 288 Suape New Fortress Energy floating Suape LNG In the development phase 2022 Brazil TBC 605 Barcarena New Fortress Energy floating Barcarena LNG In the development phase. 2022 Brazil Gas Natural Acu II 1,700 Açu Prumo, BP, Simens floating BW Magna/ Courage Under Construction 2023 Vietnam Bac Lieu combined cycle power plant 3,200 Bac Lieu Delta Offshore Energy floating NA Pending approvals 2023 Brazil Novo Tempo 605 Barcarena Prumo floating Golar LNG vessel Under Construction 2025 Vietnam TBD TBD Haiphong ExxonMobil, JERA likely onshore TBD Pending approvals.. 2026 Bangladesh ACWA Power 3,600 Maheshkhali (to be confirmed) ACWA Power existing floating and planned onshore terminal Excelerate’s FSRU Summit LNG ( pre-FID TBC Sri Lanka Kerawalapitiya LNG Power Plant 300 Kerawalapitiya TBC (tender announced in September 2020) TBC TBC Proposed TBC Philippines TBD TBD Batangas province First Gen Corp onshore TBC Aprovals and financial closure stage TBC Philippines Pagbilao Power Project 650 Pagbilao Island, in the Quezon Province Energy World onshore - Aprovals and financial closure stage TBC Philippines TBC TBC Bay of Batangas Excelerate floating Luzon LNG Aprovals and financial closure stage TBC Source: Press releases, The International Group Of Liquefied Natural Gas Importers, OIES, Fitch Solutions We have identified a number of drivers behind the growing interest in LNG-to-power projects, including price flexibility, gas supply diversification and decarbonisation efforts. The expansion of the LNG market over the last couple of years has been the key factor in the development of LNG-to-power concepts globally. While at the local level we see that limited domestic supply of natural gas, insufficient access to natural gas import pipelines and/or natural gas supply diversification are the key factors working in favour of LNG-to-power projects. Countries reliant on oil in their power mixes are also keen on implementing LNG-to-power solutions to decarbonise their economies. For some of the countries that lack pipeline infrastructure, an LNG import terminal can be (depending on their geography and regional dynamics) a more feasible solution, allowing them to access the global natural gas market. As an example, Malta invested in an LNG-to-power project in Delimara, which has been operational since 2018, as the country awaits the commencement of operations of a planned pipeline connection, scheduled for 2025. Brazil has also announced a plan to expand its LNG import capacity as it wants to lower its reliance on pipeline gas imports from Bolivia. LNG-to-power projects have also become an alternative for economies that rely on petroleum fuels in their power mix. That was the case with the project in Gibraltar, where the only power plant was converted from marine diesel to natural gas. This factor is also prevalent in the Caribbean where a number of smaller economies rely on heavy fuel oil or diesel to generate power. In our view, investment in LNG-to-power facilities as a means to decarbonise the power sector will also gain additional momentum, with the advancement of technologies in liquefaction and power generation facilities that would reduce the emissions footprint of the LNG industry. This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.