Industry Trend Analysis - First LNG Delayed To 2018 - FEB 2018

BMI View: T he delay to Perenco 's Kribi project in Cameroon will push the start of the country's first LNG production into 2018, adding to the expected supply glut.

With the delay to Perenco LNG project, we have revised our natural gas production growth forecast for Cameroon into 2018. The liquefaction unit will be located near the Kribi port and produce 1.2mn tonnes of LNG for export ( see 'Opportunities Lie in Smaller-Scale LNG ' , 5 October 2015). Norwegian shipping company Golar LNG announced that the Hilli vessel left Singapore and should reach Cameroonian waters in late November, when hook-up and final testing can begin.

Initially, the commissioning of Cameroon's offshore Kribi gas field project was scheduled for Q217. However, extended testing of the Hilli Episeyo vessel was undertaken in Singapore, pushing the prospect of starting Cameroon's LNG exports into 2018. To avoid potential commissioning setbacks and various challenges that have plagued other LNG project start-ups in recent years ( see 'Singapore SLInG: Prices To Bottom In 2019', 29 September 2017), additional tests were necessary to ensure that the Kribi project would start as planned when. Due to this delay the production of liquefied natural gas is likely to start in 2018.

Production Increasing At Slower Pace
Dry Natural Gas Production, bcm
Source: BMI/EIA

Although the LNG sector looks to be increasingly well supplied in 2018, the floating LNG project should not face substantial risk given Gazprom, the sole off-taker from the FLNG terminal, has already agreed to purchase all LNG produced from the offshore Kribi field. However, the delay to Perenco's project will contribute to the growing LNG supply glut that we expect to see emerge in 2018 ( see '2018 The Tipping Point For LNG', 5 September 2017).