Business | Oil & Gas
LNG import projects in Europe face rising costs
Liquefied natural gas (LNG) projects, including a venture led by Gaz de France and Total, may face a doubling of the costs of building import terminals in Europe, crimping competitiveness, a consultant said.
- Bloomberg
- Published: 23:54 March 20, 2008
Singapore: Liquefied natural gas (LNG) projects, including a venture led by Gaz de France and Total, may face a doubling of the costs of building import terminals in Europe, crimping competitiveness, a consultant said.
Construction costs for LNG facilities in Europe have jumped by an average 12 per cent a year in the past eight years, US consultant Poten & Partners said in a report.
Companies are building LNG import terminals to benefit from a 10 per cent annual growth rate in global demand for the fuel, which is expected to nearly triple the market to 500 million metric tonnes by 2030, according to ExxonMobil and Total.
Iron ore prices gained for a sixth year to a record as China increased production of steel, which together with concrete, is used to build LNG storage tanks.
Expenditures
"Costs on the engineering, procurement and construction side as well as developer's own expenditures have risen sharply," Poten said.
"This could undermine efforts to attract LNG supply away from alternative markets not only in Asia and North America but also from existing terminals in Europe that are already fully depreciated and have lower cost structures."
South Korea, Taiwan and Japan, which operate decades-old LNG facilities, paid as much as $20 per million British thermal units, or more than twice the price of the US benchmark at Henry Hub, to draw spot cargoes away from Europe and US.
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