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Go Small or Go Home: The New LNG Mentality

With constant economic difficulties within the Oil & Gas field, it is interesting to note the trends that emerge for the companies that not only survive, but do well.

Sometimes this means downsizing the whole company in terms of staff, rig count or operations, but for Liquid Natural Gas (LNG) the solution is to build smaller.

To deal with a saturation of the demand which is bringing down the prices of LNG, producers have been forced to either cut costs or come up with alternative ways for profit making. For some, this means postponing or even cancelling projects: a notable example is Petronas, who only a few weeks ago scrapped a $27 billion project to build a production facility in Canada.

For those who are finding other opportunities, building small has been the preferred option. Instead of the massive rigs with huge potential, these companies are opting for projects roughly a third of the size of the existing terminals. To reflect this, the costs are only a fraction of the usual. Consequently, this has opened a completely new market, as novelty areas, such as the Middle East and Latin America, are looking for recurring deliveries of small amounts of LNG.

The solution is important to note in contrast of the failing efforts. Despite the recline in the main operations, these smaller ventures targeting smaller customers are truly thriving. To name a few, Mozambique and Equatorial Guinea are becoming hosts to these sites this year, which is promising, seeing how regular LNG supply is predicted to exceed demand by 48% in 2020.

Dashboard’s interest in the trends like this one lie in knowing how best to support the industry and what skills and knowledge are required. Preparing ourselves for a changing market with smaller partners allows us to be ready for both the challenges and opportunities, which is why our technology is such a good fit for it.