Pöyry Point of View: Opportunities and challenges lie in the small scale LNG market

The new Pöyry Point of View “Still a strong case for small scale LNG” by Pöyry Management Consulting details where the opportunities and challenges lie in the small scale LNG market. Concluding that despite the increased uncertainty, ssLNG presents interesting opportunities for diverse energy players.

Vantaa, Finland, 11-Jul-2016 — /EuropaWire/ — Three years ago Pöyry released its first report on ssLNG. Since then the obstacles facing the industry have shifted. Past issues of financing up-front investment have diminished as larger companies entered the market; however, the industry is now faced with lower demand as seller’s fears of commodity price falls force them to be more passive. Added to this, there is the difficult task of arranging coordinated investments and risk allocation throughout the value chain in a space where producers and consumers have diametrically opposed expectations.

Whilst these challenges are very real, Pöyry maintains that ssLNG presents an attractive business case for diverse energy players with the right business model. Pöyry bases this assessment on three factors.

Firstly, the availability of ssLNG is increasing. From being a niche product in pockets like Spain and Norway, the product is now available in most North West European markets and the involvement of major players such as Shell and Gasum is leading to greater upfront investment.

Secondly, although it is taking a little longer than expected, demand is growing, particularly in the transport sector. LNG bunkering in the marine sector has led to over 150 LNG-fueled ships in operation and on order as of October 2015, with major plans in Asia to develop more capability. Added to this, a number of road transportation companies with large fleets have seen the advantages and operate a significant number of LNG-fueled trucks.

Finally, although oil prices have fallen to new lows narrowing the gap between diesel and LNG, the future price level is what really matters. Small scale LNG prices are expected to decrease with more investments, competition and market maturity, so the cost advantage of LNG should increase in the future, bringing greater demand from the transport sectors in particular.

Andrew Morris, Director at Pöyry said:

ssLNG is moving in the right direction, with an increasing number of players taking an interest. However, the potential complexity of the value chain and lack of transparency in price levels and models pose considerable risk, meaning different entities that have not worked together before will need to come together and deliver mutually beneficial business models”

Pöyry has in recent years assisted a number of players in different parts of the value chain, from technical feasibility studies for physical facilities through market analysis and business strategy to due diligence on potential take overs.

Download the Point of View: “Still a strong case for small scale LNG” (PDF format)

Additional information by:

Metin Parlak
H+K Strategies
+44 207 413 3771

James Townsend
External Communications Manager, Pöyry
+44 7824 145091

About Pöyry
Pöyry is an international consulting and engineering company. We serve clients globally across the energy and industrial sectors and provide local services in our core markets. We deliver management consulting and engineering services, underpinned by strong project implementation capability and expertise. Our focus sectors are power generation, transmission & distribution, forest industry, chemicals & biorefining, mining & metals, transportation and water. Pöyry has an extensive local office network employing about 6,000 experts. Pöyry’s net sales in 2015 were EUR 575 million and the company’s shares are quoted on Nasdaq Helsinki (Pöyry PLC: POY1V).


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