Delays in LNG Projects in 2020

From Global Energy Monitor
This article is part of Global Energy Monitor's coverage of the COVID-19 pandemic.

In the Spring of 2020, the gradually increasing supply glut, which has resulted in tumbling prices for LNG in recent years, took on extremely acute dimensions for LNG infrastructure project promoters as a result of the simultaneous shocks of the COVID-19 pandemic and the oil price crash. If new LNG projects were not already bordering on being unviable and un-bankable before the global health crisis struck, major new projects—particularly in North America—are now being delayed, with some at risk of being scrapped altogether.

Announcements with implications for Japanese and other financiers of LNG include:

  • In March, delays were announced at the US$30 billion Rovuma LNG Terminal in Mozambique led by ExxonMobil and Eni.[1] According to industry analysts, the Rovuma project requires an average price of US$7 per MMBtu throughout its life to be profitable. At US$2.7 per MMBtu in February, the LNG price cratered further to below US$2 by the end of May. Reluctance from investors to commit to the project in these circumstances was expressed.[2] The final investment decision (FID) expected in the first half of 2020 has been pushed back to at least 2021, with ExxonMobil reluctant to confirm the precise timing.[3] In April, it was reported that the project’s construction site had been shut down and quarantined due to COVID-19 infections among workers.
  • LNG Canada, the Shell-led US$31 billion project under construction in British Columbia and in which Mitsubishi Corporation has a 15% stake, announced in March that it was having to cut its workforce in half as a precautionary measure against the COVID-19 pandemic and to help local communities deal with the outbreak.[4] Sempra Energy announced it was delaying an investment decision for the Costa Azul LNG Terminal in Baja, Mexico, in which Mitsui & Co. has a stake.[5] Australia’s biggest oil and gas exporter Woodside Petroleum announced that it was delaying the FID for the US$25 billion Browse LNG Terminal project in which Mitsui & Co. and Mitsubishi Corporation have a US$2 billion stake. Plummeting prices and demand compelled Woodside to delay this and two other LNG terminal projects as part of a package of measures to reduce its capital expenditure in 2020 by US$32 billion.[6]
  • The planned FID for the proposed Commonwealth LNG Terminal in Louisiana was delayed in April.[7] Sumitomo Mitsui Banking Corporation (SMBC) is the project’s Financial advisor. The FID for the Phase 3 expansion of the Corpus Christi LNG Terminal in Texas was delayed to beyond 2022.[7] Earlier phases of the project received substantial financing from Japanese commercial banks between 2017 and 2019. The FID for the Rio Grande LNG Terminal in Texas, the subject of ongoing legal action by environmental groups, was delayed to 2021.[8] In 2019 SMBC notified groups campaigning against the project that it had relinquished its role as financial advisor.[9] But the possibility of Japanese financial involvement remains open.
  • Delayed FIDs, acute financial difficulties and COVID-19 related construction disruption are affecting a further nine U.S. LNG terminal projects, including the proposed expansion to the Cameron LNG Terminal in Louisiana in which Mitsui & Co., Mitsubishi Corporation and Nippon Gas have stakes.[10] S&P Global Platts’ senior director of global gas and LNG described the oil collapse as “the nail in the coffin” for some U.S. LNG projects and will lead to delays for existing terminals looking to expand.[11]
  • Supply side impairments have become pronounced in the U.S., with Reuters reporting the cancellation of 20 U.S. LNG cargoes which were planned to ship to Asia and Europe in June, and a further 45 cargoes cancelled for July.[12] According to energy research company Rystad Energy and available government data published in May, the extreme slowdown in industrial activity caused by the coronavirus pandemic has resulted in decreased demand for LNG in Asia. In the region’s key LNG markets, Rystad estimates that imports for LNG will decline in Japan by 1.2% year-on-year in 2020 and by 0.5% in South Korea, with only China set to register a 1.8% increase in LNG imports over 2020, sharply down from the 12.1% growth in imports it registered in 2019.[13]

Such trends and examples look set to accelerate in the short-term with forecasts for LNG’s prospects beyond the mid-2020s also becoming gloomier as the global pandemic’s impacts continue to play out. In May the Eurasia Group consultancy warned of “a future of tepid demand growth” for LNG linked also to demographic changes in established markets such as Asia.[14]

In the U.S. context particularly, LNG’s prospects look set to be compounded by mounting financial distress for the US fracking industry. Analysis in March this year by the Institute for Energy Economics and Financial Analysis shows that, even before the outbreak of the COVID-19 crisis and the OPEC-Russia oil price war, shale-focused companies in the U.S. had astronomical levels of debt on their books.[15] The looming shake-out for the industry will be detrimental to LNG export ambitions in the U.S.

Articles and resources


  1. Aaron Sheldrick. "Japan spot LNG import prices hit record low amid coronavirus outbreak". AF. Retrieved 2020-06-05.
  2. Coronavirus, gas slump put brakes on Exxon's giant Mozambique LNG plan, Reuters, Mar. 21, 2020
  3. Mozambique expects Exxon gas project decision next year, Reuters, Jun. 3, 2020
  4. LNG Canada says it's cutting its workforce in half to protect local communities from COVID-19, Vancouver Sun, Mar. 17, 2020
  5. Sempra confirms decision on Mexico LNG project, may delay decision on Texas plant, Reuters, Mar. 24, 2020
  6. $32 Billion In Australian Oil And Gas Work Deferred Till Markets Improve, Forbes, Mar. 27, 2020
  7. 7.0 7.1 FID’s delayed by global uncertainty, Riviera Maritime Media, Apr. 24, 2020
  8. NextDecade pushes back financial decision on Rio Grande LNG, Houston Chronicle, May 28, 2020
  9. Rio Grande Valley: At Risk from Fracked-Gas Export Terminals, Rainforest Action Network, July 2020
  10. Impact of COVID-19 Pandemic on Major Fossil Fuel Projects in the U.S.,
  11. Oil Crash Is a Double-Edged Sword for LNG Projects at Risk, Bloomberg, Mar. 13, 2020
  12. Spot LNG, the worst-performing energy commodity, faces more price pain: Russell, Reuters, Jun. 4, 2020
  13. Coronavirus curbs LNG demand in China, Japan and South Korea, Nikkei Asian Review, May 6, 2020
  14. LNG faces underlying troubles beyond Covid-19 – analyst, Montel News, May 4, 2020
  15. Shale Producers Spilled $2.1 Billion in Red Ink Last Year, Institute for Energy Economics and Financial Analysis, Mar. 20, 2020

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