Westwood Global Energy Group is forecasting engineering, procurement and construction (EPC) contracts related to floating LNG (FLNG) developments reaching $35 billion over the next several years.

By the end of the 2023-2027 period, Westwood expects an additional 18.3 million tonnes per annum (mtpa) of FLNG capacity onstream, with initial EPC contract awards valued at $13 billion.

Through 2027, a further 36.5 mtpa is anticipated to come onstream post-2027 from sanctioned FLNG units, adding an additional $22 billion of EPC contracts, Westwood announced on April 4 on its website.

cumulative FLNG throughput capacity by region
Global cumulative FLNG throughput capacity by region. (Source: Westwood)

“With increasing energy demand and the challenges of energy security, the need for gas to meet the immediate and medium-term energy demand is driving investments in the FLNG market, given the role gas will play in transitioning to a low-carbon energy future,” the London-headquartered consultancy said.

Future LNG supply is expected to continue to rise in coming years, especially from the U.S. and Qatar, according to the Energy Information Administration. The decision by Russia’s President Vladimir Putin to invade Ukraine in February 2022 has boosted demand for LNG imports in the U.K. and Europe to replace reduced Russian energy supply.

“The current risk is that this will lead to an oversupply in the market and push out riskier and higher cost projects,” Westwood said. “This means that FLNG developments must focus on its differentiator to compete — including its speed to market and flexibility.”

global FLNG throughput capacity status by region
Global FLNG throughput capacity status by region. (Source: Westwood) 

While the demand outlook for LNG remains robust, the rise in coal-to-gas switching and further industrialization in Asia (mainly China and India) creates a key growth opportunity for LNG, according to Westwood.

“The significant drive to develop renewables and other new energies (such as hydrogen) in Europe and more mature Asian markets (including the traditional LNG demand markets of Japan, Korea and Taiwan, as well as China), could represent a downside risk for the sanctioning of additional FLNG capacity post-2030,” Woodside added.

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