LNG MARKET RISING
LNG investments could soon increase as the fuel could soon benefit from a rising demand for gas from the transport sector. According to a report by Cedigaz, LNG is set to increase its market share in the transport sector by 2035.
'The greatest potential is seen in road transport, were annual demand is projected to reach 96 million tons per year (mtpa) in Cedigaz' base scenario while demand in the marine sector could grow to an estimated 77 mtpa. The rail sector could add another 6 mtpa to global demand,' reads a note released by Cedigaz, the International Center for Natural Gas Information, on Monday.
Despite the positive prospects, LNG could stumble on hurdles that could limit its growth. Namely, the environmental legislation in the marine sector will be the main factor explaining a dizzying growth or a more moderate one.
'There is little doubt that the use of LNG as a fuel will grow in the marine sector, though the rate and pace of growth will be highly dependent on the timing and geographical scope of emissions restrictions set out in the MARPOL treaty.'
In the marine sector, legislation is an important element to take into consideration. In this context, LNG could suffer the competition of gas treatment technologies.
'Economic analysis taking into account all relevant factors (capex, opex, operational constraints, loss of cargo space etc.) show LNG to be a very attractive solution when compared to other compliance solutions,' the report explains.
Additionally, the LNG's growth rate also depends on the future price of diesel. At the moment, Cedigaz sees a strong case for LNG, given the cost advantage of LNG relative to diesel in the trucking industry.
'Use of LNG in land transport will be largely limited to heavy duty vehicles (HDV) and will essentially be driven by the difference between the price of diesel and that of LNG.'
China is expected to be the main actor in this context. The country could represent almost half the 96-mtpa global market in 2035.
'China has several features that combine to make it a prime candidate for the development of LNG in the road sector. The country has the world's largest inland goods transport market and has already developed an extensive LNG supply infrastructure, initially as a means of transporting gas from remote fields or to consumers who were not connected to the pipeline supply network.'
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