How much LNG could be marketed in the Caribbean and Central America?
With the LNG market likely to be oversupplied in the next few years, identifying promising emerging markets is fundamental to a successful commercial strategy.
In recent years, the region has caught the attention of important players, and some of the notable developments include Gas Natural Fenosa's deal in Puerto Rico, Shell's LNG SPA for the under-construction regas facility in El Salvador, and the AES-Engie joint venture for LNG marketing using AES' Dominican Republic and Panama hubs. In addition, the unique logistical challenges have led some — like newcomer New Fortress Energy — to develop innovative solutions that make investing in the region more attractive.
The region's potential is underpinned by its current reliance on oil for baseload power generation and the opportunities this creates in conversion to gas and new LNG gas-to-power projects. Excluding Colombia, which has a hydro-reliant system, fuel oil and diesel power plants make up 54% of installed capacity.
In our latest report, we provide an overview of power markets, discussing generation infrastructure and the competitive landscape. We then take a deeper dive into the LNG market by discussing existing and proposed regas terminals, existing commercial relationships and specific potential opportunities.
Our main findings are the following:
- In 10 years, LNG demand will grow six-fold from 2 mmtpa to 12+ mmtpa
- Growth is driven by the potential of LNG gas-to-power – both conversions and new plants
- There are plenty of opportunities for marketing as less than 20% of projected LNG demand has been contracted
- LNG facilities expected online in the next seven years will add 2.4 bcf of regas capacity and will require US$ 2.7 billion in investment
The markets included in our analysis are the following: Puerto Rico, Dominican Republic, Jamaica, Colombia, Panama, El Salvador and Curaçao.