Project Development & Finance

Competition, Commoditisation & Consolidation 3 Competition Can we believe forecasts that global LNG trade will double by 2035? number of exporting countries, the number of importing countries, and the number and diversity of industry players. This scenario would be a continuation of past trends. The number of LNG-importing countries has risen from 18 in 2008 to 42 in 2018, as Bangladesh and Panama joined the club, while exporting countries have risen from 15 to 20. On both counts, more are waiting in the wings. RECORD YEAR FOR FIDS LNG trade volume has grown from 172 million tonnes (Mt) in 2008 to 314 Mt last year, as reported by the O f the various factors likely to drive M&A activity in the LNG business over the coming decade, the most fundamental is the expectation that the industry will continue to grow at a rate that few other industries can aspire to. In such a scenario, competition would make itself felt in two ways: LNG would need to compete against other energy sources, including pipeline gas; and, if it did so successfully, would attract new players to the business. So growth is likely to manifest not just as a rise in the volumes of LNG produced and traded, but in the importers' group, GIIGNL. New supply projects continue to come on stream as those under construction reach completion and as project developers reach final investment decisions (FIDs) on new ventures. In 2019, another 35 Mt of supply is expected. Moreover, it looks highly likely that 2019 will be a record year for the amount of liquefaction capacity reaching FID – in the United States, Sub-Saharan Africa, Russia and elsewhere. In its latest long-term outlook, Shell – a world leader in LNG, with a 22% share of global sales in 2018 – forecasts that global trade will grow by an average of 4%/year between now and 2035. This would see LNG trade rise to some 610 Mt (840 Bcm), a near doubling. Demand, says Shell, will be led by Asia and Europe "as the world tackles poor air quality and climate change". The outlook projects that 70% of energy demand growth to 2035 will be met by gas and renewables combined, with gas supplying more than 40% of additional demand. One important driver is the role gas can play in partnering renewables to compensate for their intermittency and in bolstering the resilience of electricity grids. Ireland, a world leader in the integration of renewables into its electricity system, Source: IEA FIDs in new LNG liquefaction capacity Australia Russia United States Canada Others 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 H1 Bcm/year

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