The Global Small Scale LNG Market is expected to grow at a high CAGR of 7.29% during the forecasting period (2022-2029).
Liquefied natural gas (LNG) is a type of natural gas converted to a liquid state through a process known as liquefaction. The usage of LNG is widespread, which is projected to drive demand for small-scale LNG over the forecast period. The cleanest fossil fuel is natural gas, emitting the fewest emissions.
Due to strong restrictions against climate change, a widening supply and demand mismatch, growing awareness about cleaner and sustainable energy sources and decreasing fossil resources, the energy sector faces challenges. Because of its large volume, natural gas has storage concerns. For the convenience of transportation, natural gas is transformed to liquid form at liquefaction facilities and the liquefied gas is converted to gas at terminals of regasification.
The growing demand for small-scale LNG in various end-use applications such as heavy-duty vehicles, marine transport and industrial & power generation is driving demand for small-scale LNG. However, hefty transportation costs are projected to limit market expansion.
Rising number of LNG-fueled fleet
The rising energy demand has recently increased the need for liquefied natural gas (LNG), resulting in increased LNG output (LNG). In addition, numerous distant locations lack electricity and government measures to improve rural electrification have increased the demand for liquefied natural gas in recent years.
Furthermore, due to the increased need for energy due to industrialization and rising household needs, the global market for small-scale liquefied natural gas is predicted to grow (LNG). One of the primary reasons driving the market's growth is rapid industrialization, accompanied by increased demand for energy-efficient and cost-effective energy sources. Furthermore, the transportation industry's widespread product uptake is boosting the economy.
Energy-cost advantage of LNG and its usage in the transport industry
Liquefied natural gas (LNG) is also used for cooking and heating. The development potential for the small-scale liquefied natural gas (LNG) market is predicted to increase throughout the projection period due to the rising population. Furthermore, in the projection year, price reductions in natural gas and price fluctuations in crude oil due to overproduction of crude oil are likely to stimulate the expansion of the small-scale liquefied natural gas (LNG) industry.
Commercial vehicle manufacturers are moving away from traditional fuel sources in favor of LNG, which has full combustion and produces fewer carbon emissions. Following it, the growing demand for power generation in underdeveloped and isolated places worldwide boosts the market's prospects. Another factor driving development is the rising usage of LNG as a ship fuel rather than heavy fuel oil, marine gas oil & diesel oil.
LNG shipping costs are high.
LNG shipping prices are the most volatile cost component in the whole LNG supply chain and they have a significant impact on LNG supply competitiveness. Even if more ships are needed to fulfill increased demand, LNG is unlikely to generate considerable additional maritime congestion until more rigorous safety and security requirements for handling LNG carriers are implemented. Skilled personnel shortages are anticipated to be a problem for the ships.
The outbreak of the COVID-19 pandemic has significantly altered the global market for Small-Scale industrial LNG. Due to the COVID-19 epidemic, almost all major countries witnessed a slowdown in economic development, affecting consumer purchasing habits. The COVID-19 epidemic has placed unprecedented strain on economies and society; its consequences will be severe and while its longevity is unknown, it is too early to predict negative effects. The LNG industry has been greatly impacted, posing several obstacles, but there are also likely to be some opportunities.
Shipments have been hampered by quarantine. However, this has resulted in a delay rather than a reduction in supplies. The COVID-19 pandemic has significantly influenced the market, causing supply chain disruptions, reduced energy use and discouraging investments in newer technology. However, as large-scale LNG plants face increasing pressure to provide returns to investors, operating corporations are increasingly supporting small-scale LNG projects.
By application, the small-scale LNG market is segmented into heavy-duty vehicles, transport, industrial & power and others.
Transport to hold the lions’ share.
LNG is largely utilized to fuel trucks and ships, owing to its cost-effectiveness and environmental advantages over diesel and fuel oil. LNG can increase the life of a vehicle by up to three times because it is non-corrosive and non-toxic. Furthermore, because LNG has a very low boiling point, just a small amount of heat is necessary to convert it to a gaseous state at high pressure, requiring little mechanical energy. As a result, LNG is a good transportation fuel.
Handling LNG is a difficult undertaking because even a small fluctuation in temperature can cause the fuel to boil and vaporize, resulting in fuel waste. As a result, passenger cars are much less viable than heavier vehicles like commercial trucks. The use of LNG in the transportation sector has been restricted. LNG as a transportation fuel is gaining popularity around the world. LNG-powered trucks have already begun to be deployed in China, U.S. and Europe, mostly for long-distance freight transport. Government policies and laws on decarbonization and emission control, such as China VI and the European Green Deal, are largely to blame.
The European Green Deal, launched by the European Commission in 2019, is a package of policy initiatives to make Europe carbon-neutral by 2050. The regulations stress the use of LNG as a fuel for trucks and marine vessels and they briefly highlight the role of LNG in achieving the goal. According to SEA-LNG, 75 LNG-fueled ships were in service as of 2020, with another 155 LNG-fueled ships.
The International Maritime Organization (IMO) began a new law in January 2020, imposing a global sulfur cap of 0.5% on marine fuels. Compared to traditional petroleum-based marine fuel oils, LNG has become a more realistic alternative as a marine fuel because it emits about 90% less NOx, virtually no SOx and virtually no particulate matter. As a result, LNG will play a critical part in this clean air drive. It will also have a major positive impact on the small-scale LNG business.
Rising implementation of small-scale LNG in Asia-Pacific.
Asia-Pacific has been a global leader in implementing small-scale LNG projects in recent years. Small-scale LNG (SSLNG) has grown in popularity as natural gas demand has surged in China, India, Singapore, Japan and others. Domestic production and import via pipelines and LNG terminals are part of China's natural gas market. China's industrial, residential and power generation sectors are driving up demand for small-scale LNG, with the transportation sector holding the most promise.
The primary reason for the expansion of small LNG facilities in China is the rise in the number of LNG trucks due to the higher fuel price than natural gas. The LNG bunkering facilities in Singapore's ports drive the small-scale LNG economy in the city-state. Singapore is a hub of one of the world's most important trading ports and is a global leader in international marine shipping. The Pacific Emerald, an LNG-fueled oil tanker, was bunkered in Singapore for the first time in May 2021 by FueLNG and the Maritime and Port Authority of Singapore (MPA). FueLNG further stated that by 2021, it expects to provide 30 to 50 ship-to-ship LNG bunkering activities.
The small-scale LNG market in the world is fiercely competitive. To develop their business globally, the players concentrate on mergers and acquisitions. For example, in collaboration with the Ministry of Infrastructures and Transport and the Tuscany Region, the Ministry of Economic Development approved the discharge of LNG on small-scale LNG carriers in February 2021. OLT Offshore LNG Toscana SpA (OLT) has announced the next step in the small-scale LNG project's completion.
Wipro Limited stated in August 2020 that Uniper Global Commodities SE and its 100% LNG-for-trucks subsidiary Liqvis GmbH have successfully implemented a blockchain-based small-scale liquefied natural gas (ssLNG) trading/fulfillment platform.
FGEN LNG, a subsidiary of First Gen Corporation, investigated the feasibility of a small-scale LNG production at the First Philippine Industrial Park in November 2020. (FPIP). FPIP might receive LNG from FGEN LNG's Interim Offshore LNG facility through trucks and specialized insulated containers. It is projected to help the market expand.
Major global Small-Scale LNG market companies include The Linde Group, Wartsila Oyj Abp, Baker Hughes Company, Honeywell International Inc., Chart Industries Inc., Black & Veatch Corp, Anthony Veder Group NV, Royal Dutch Shell PLC, Engie SA and Eni SpA.
Royal Dutch Shell PLC
Overview: Royal Dutch Shell was established in 1907. The Shell group's parent company is Royal Dutch Shell plc, based in England and Wales. Shell is a global energy company specializing in the exploration, refining, production and marketing of oil & natural gas and the manufacturing & marketing of chemicals. The company has a presence in over 70 countries.
Product Portfolio: Upstream, Integrated Gas and Renewables and Energy Solutions (formerly New Energies) and Downstream are the divisions of the company's operations. The upstream organization is in charge of discovering & extracting crude oil, natural gas and liquids. The organization also markets and transports oil & gas and operates the infrastructure required to get products to market.
The integrated gas organization oversees LNG operations, gas-to-liquids (GTL) fuels and other products. It encompasses natural gas exploration and extraction and the operation of the upstream and midstream infrastructure required to deliver gas to market. It trades and markets natural gas, LNG, crude oil, electricity & carbon-emission rights and markets & sells LNG as a heavy-duty vehicle fuel.
Hydrogen, power from renewable and low-carbon sources like wind, solar & natural gas and decarbonization options like nature-based solutions and carbon capture & storage are examples of renewables and energy solutions. The downstream organization serves over 30 million customers at approximately 46,000 retail service stations every day.
Key Development: In May 2020, Shell Gas B.V., a subsidiary of Royal Dutch Shell plc, said that it had completed all of the conditions for its Final Investment Decision (FID) on a new LNG processing unit in Nigeria LNG (NLNG). Formal commitments from the entities providing funding for the project were among the prerequisites. Following the FID, NLNG has announced contract awards for engineering, procurement and construction (EPC).
Once it is online, the new Train 7 unit will add roughly 8 million tonnes per annum (mtpa) to the Bonny Island complex, bringing the overall capacity to around 30 mtpa. The decision to build a seventh processing unit, or train, will strengthen NLNG's contribution to the country's growth by generating revenue for the Nigerian government.
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