LNG to power projects take off

With a flurry of new liquified natural gas (LNG) projects due to come online around the world in the next few years, and fears of an oversupply, attention is now turning to the potential of LNG to power projects as a relatively efficient way of adding significant capacity to the power grid, especially in emerging markets.

The falling cost of LNG means it can now compete with other fuels in many markets, and it therefore has the potential to help address shortages in power generation capacity. We are seeing LNG to power projects getting off the ground across Africa, South America and Asia, where a lack of infrastructure adds to the challenges of developing conventional independent power projects.

There are currently over 20 confirmed LNG to power projects coming online, the majority of which will make use of floating storage and regasification units, which have now been shown to represent a cheaper and more flexible solution to LNG storage than land-based facilities. The fact that the commercial viability of these has been proved in recent years is further fuelling the advent of more projects to meet demand going forward.

With three models being considered for these LNG to power projects – the merchant model, the integrated model and the tolling model – we see a number of our clients seeking to get into this space, and we anticipate new players moving in this year. So far, the likes of Total, Engie, Cheniere and Reliance have projects under construction, in Cote D’Ivoire, Panama, Chile and Bangladesh respectively, and there are certainly more to come with BP being one of the firms to watch. All of these projects need floating storage and regas units.

From a recruitment perspective, the growth of this market creates an entirely new demand for individuals with much broader skillsets than just LNG or power. Companies are now looking for people that can also look across power, and who have relationships across various different products. Professionals that can exhibit an understanding of LNG and power networks, are familiar with the floating storage and regas units, and know emerging markets, will quickly be in high demand.

Only a select few firms, such as Shell and Cheniere, have individuals with this type of skillset and those that exist were typically doing power earlier in their careers before moving into LNG in the past decade. These projects are happening now, and if other players wish to get into the game, they are going to have to move fast to pick up scarce talent.