Characteristics and challenges in the construction of LNG receiving stations

The English term for LNG receiving station is “LNG Terminal”. In Chinese, it is called “液化天然气接收站”. It refers to a facility that stores liquefied natural gas and then distributes it. An LNG receiving station includes an LNG terminal and an LNG storage tank area. Implementing the use of LNG cold energy can reduce cold pollution and improve the overall efficiency of energy utilization. There are a wide range of applications for LNG cold energy: depending on the conditions under which the natural gas is supplied, either gas turbine or expansion methods can be used to generate electricity from LNG cold energy ； A low-temperature freezer can be built next to the LNG receiving station, using the cold energy from LNG to freeze food ； LNG’s cold energy can also be utilized for low-temperature drying and crushing, which is applicable in the pharmaceutical and food industries ； Liquefying carbon dioxide using the cold energy of LNG, for use in welding, firefighting, frozen foods, and other applications ； The cold energy from LNG can also be used to separate air, thereby producing liquid nitrogen, liquid oxygen, and liquid argon. 　　 Overview Poten&Partners predicts that by 2015, global LNG trade volume will increase from 132 million tons in 2004 to 375 million tons. From 2004 to 2015, Japan’s share of LNG trade in the Asia-Pacific region will decline from the current 65% to 39%. The additional LNG demand in the Asia-Pacific region will come primarily from emerging markets such as China, India, and the West Coast of North America; by 2015, the demand from these emerging markets is expected to reach 65 million tons. The expansion of the LNG industry in the Atlantic Basin is concentrated mainly in markets such as the United States and the United Kingdom. By 2015, the U.S.’s LNG imports are likely to exceed those of Japan, while the UK could replace Spain as Europe’s largest importer of LNG. 　　As a clean energy source, natural gas is gaining increasing popularity; many **consider LNG to be the preferred fuel, and its share in the energy supply is rising rapidly. Liquefied natural gas is growing at a rapid rate of about 12% per year, making it one of the fastest-growing energy sectors in the world. In recent years, the production and trade of LNG on a global scale have become increasingly active. LNG has become a scarce clean resource and is emerging as a new focus in the world’s oil and gas industry. To ensure a diversified energy supply and improve the structure of energy consumption, major energy-consuming countries are paying increasing attention to the import of LNG; Japan, South Korea, the United States, and Europe are all building LNG receiving stations on a large scale. Major international oil companies are also shifting their new sources of profit growth to the LNG sector; LNG is set to become the next globally sought-after energy commodity after oil. Future 　By 2015, half of the LNG supply in the Asia-Pacific region will come from newly built LNG production facilities, 40% of which are already under contract or in construction. By then, the Atlantic Basin will need an additional LNG supply capacity of around 145 million tons per year, two-thirds of which is already committed or under construction. Qatar’s new large-scale LNG projects will enable the country to quickly become the world’s largest LNG producer; by 2015, Qatar’s LNG production capacity will reach 76 million tons per year. 　　Over the next 10 to 15 years, the sources of LNG supply will increase. Iran and Russia are expected to be major potential LNG suppliers. Existing LNG exporters such as Trinidad and Tobago, Nigeria, Egypt, Qatar, and Australia will all increase their LNG exports, with Australia playing a significant role in LNG supply in the Pacific Basin. Future Risks The future development of the LNG industry worldwide will face the following risks: 1. New competition in the power generation sector In recent decades, gas-powered power generation has become a key driver for the development of the natural gas industry. Since improving fuel conversion efficiency and methods is beneficial for the environment, natural gas has thus become the preferred choice for fuel conversion in new power plants as well as in existing oil- and coal-fired power plants. However, due to concerns over high natural gas prices and the availability of sufficient supplies, many ** and power producers have had to reconsider their plans to build new gas-fired power generation capacity. Significant investment is currently being made in research on clean coal technologies, which will enhance the competitiveness of coal. Furthermore, nuclear power is gaining renewed attention, posing a threat to gas-powered generation as well. 　　2. Industrial demand may decline. In the United States, many large-scale industries are built using cheap natural gas. Some of them can be converted to use alternative fuels, while existing facilities that rely on expensive natural gas are likely to become unprofitable; it would be better to build new facilities in places abroad where cheap natural gas is available. 　　3. Competition from pipeline natural gas 　　Rising natural gas prices will undoubtedly spur the construction of gas pipelines in the North Slope of Alaska in the United States and the Mackenzie Delta in Canada; natural gas reserves that were not economically viable at lower gas prices are now once again becoming attractive. In Europe, especially in North-West Europe and the UK, gas pipelines can deliver large quantities of natural gas to the market. Norway and Russia are seeking to expand their pipeline gas supplies to Europe, thereby competing with LNG. In the Mediterranean region, Libya is becoming an important supplier of pipeline natural gas ； Algeria is seeking to expand its pipeline gas supply to Southern Europe in order to export LNG to other regions. In the long term, Central Asia and the Middle East will also supply pipeline gas to Europe. In emerging Asian markets such as China and India, pipeline gas will also compete with LNG. In China, the West-to-East Gas Pipeline has begun supplying natural gas, competing with imported LNG in Shanghai. China’s initial LNG contracts with Australia and Indonesia had low prices, but it’s hard to say what will happen in the future. In addition, Russian pipeline natural gas will also enter the Chinese market. India has discovered new natural gas reserves in its eastern seas, but the more significant factor hindering LNG from entering the Indian market is price. Iran may be willing to supply LNG to India at a lower price. 　　4. Costs of liquefaction production lines are no longer falling Thanks to improved designs, larger production scales that enable economies of scale, as well as increased competition among contractors and equipment suppliers, the unit liquefaction cost in the LNG industry has been declining over the past 10 years. However, as steel and aluminum prices continue to rise, this trend of declining costs may come to an end. In recent years, the number and scale of LNG production lines planned to be built have increased. Building more than 5 LNG production lines per year (some with a capacity of up to 7.8 million tons per year) will require substantial engineering and construction resources. Meanwhile, the production line of 7.8 million tons per year that Qatar plans to build may be approaching the limits of economies of scale. Although lower unit costs facilitate the expansion of the LNG industry, the total cost of the LNG supply chain remains high. For example, a typical LNG project that exports LNG from the Middle East to the United States and has two production lines may have costs ranging from 10 billion to 12 billion dollars. 　　5. Financing Risk 　　Due to the favorable track record of LNG projects, long-term take-or-pay contracts, and reputable buyers, international banks, export credit agencies, and multilateral institutions are willing to provide loans for such projects. However, for those ** barred from bank loans, their LNG projects often fail to secure financing. In recent years, some LNG projects have only entered into long-term contracts for a portion of their production, and some buyers lack the necessary creditworthiness, which has made lenders more hesitant. Furthermore, financial institutions are not familiar with lending for LNG projects; the borrowers must understand such projects, which are intended to sell LNG to partners and sellers, rather than to gas distribution companies or distributors. 　　6. Rising construction costs for LNG carriers One of the factors that have contributed to the rapid growth of the LNG industry over the past 10 years has been the significant reduction in the costs of LNG carriers. The price of LNG carriers of average size has dropped from $220 million to $250 million in the early 1990s to around $160 million by the year 2000. Previously, LNG carriers were owned by the joint venture partners or buyers of LNG projects, or leased on a long-term basis; however, lower transportation costs have now encouraged short-term leasing of LNG carriers, thereby expanding spot and short-term trade in LNG. This has led to an oversupply of LNG shipping capacity, and this situation will persist for several years. However, due to rising prices of steel and other raw materials, increasing labor costs, and high demand for ships, the construction cost of new LNG carriers has risen to $200 million. 　　7. Difficulties in building LNG import and regasification facilities 　Compared to natural gas liquefaction plants, LNG import terminals are simpler, safer, and more reliable. However, in some **, it is very difficult to build LNG terminals due to local opposition. For example, in the United States, even with approval from the relevant federal regulatory authorities, it is not guaranteed that an LNG terminal facility can be built. Between 2005 and 2015, the United States needed to build 6 to 10 LNG import terminals, while Europe would expand several existing terminals and build at least 8 new ones

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