M&R targets LNG projects

MURRAY & Roberts (M&R) is targeting a slice of the estimated $355 billion (R4.31 trillion) global capital expenditure liquefied natural gas ( LNG) projects between now and 2025 to meet the forecast demand for the gas.

The listed construction and engineering group – which acquired US-based boutique engineering company, CH-IV International, for $5 million last year through Australianbased subsidiary Clough and Scotland-based privately owned engineering services company, Booth Welsh, for R79m – said more than 90 percent of this expenditure was estimated to be in four regions.

These were Australasia ($160bn), North America ($90bn), Africa ($50bn) and West Russia ($28bn), it said in a presentation at the Deutsche Bank dbAccess South Africa conference, which was placed on the group’s webpage.

M&R said expenditure was expected to shift from an Australasia focus in the short term to North America in the medium term.

LNG projects in East Africa would also accelerate in the longer term, it said.

Supply projects

The group said strong LNG demand growth in the Pacific Basin would drive investment in supply projects.

M&R said global LNG demand was estimated to grow 6 percent a year from 240 million tons a year in 2014 to 440 million tons a year by 2025.

The company said LNG supply from operational and under construction projects would be 350 million tons a year, but this supply would only balance demand up to 2019 and “95 million tons a year of new LNG liquefaction capacity will be required by 2025 to meet demand”.

It said that based on existing and committed projects, Australia was set to become the largest LNG exporter by 2018. Six liquefaction projects with a capacity to produce 50 million tons a year were currently under construction in that country.

The group said East Africa looked promising with the potential to build 23 million tons a year and beyond by 2025 but challenges, which it did not specify, needed to be overcome.

Export potential

It said growth in shale gas production was driving the North American LNG export story with an estimated potential for up to 95 million tons a year by 2025, comprising 80 million tons a year from the US and 15 million tons a year from Canada.

M&R stressed that project economics, country issues and buyer support would drive the development of projects.

The group added that the oil price was expected to recover from its current lows and there was a growing Australasian LNG commissioning, operations and maintenance market.

M&R said three additional LNG opportunities were expected in Papua New Guinea for the oil and gas majors, growth opportunities in the gas sector and the US and Africa were expected to present a major opportunity in LNG, while growing demand in China and Europe was expected to support investment in gas discoveries.

M&R shares rose 1.9 percent yesterday to close at R13.92.