In the LNG market, there is considerable uncertainty over when new supplies will be needed. In a low-demand scenario, it could be as late as 2023, Andy Flower, consultant for Flower LNG, said in a July 2016 report, titled “LNG Supply Outlook 2016 to 2030” for the Center of Energy Economics in the Bureau of Economic Geology at the University of Texas at Austin.

Just more than 700 million metric tons (MMmt) of new capacity has been proposed. About 75% of the proposed projects are in North America. “The proposed capacity is well in excess of any likely requirement before 2030, which means that many of the projects face long delays and abandonment,” he said.

“The successful projects will be those that can make an offer to buyers and offtakers that meets their changing requirements, which include lower prices, flexibility and shorter term contracts,” Flower emphasized.

Companies that have yet to make final investment decisions (FIDs) have to balance potential sales with fiscal reality. Tanzania and Mozambique in East Africa will be competing with LNG producers in the U.S., especially along the Gulf Coast. It will also be a competition between long-term contracts and tolling agreements.

In April 2016, LNG trains were already complete or under construction at Sabine Pass, Freeport LNG, Cameron LNG and Corpus Christi on the U.S. Gulf Coast and at Cove Point, Md., and Elba Island, Ga., on the U.S. East Coast, for completion by the end of 2018 to 2019. Shell delayed the FID on its Lake Charles, La., LNG plant.

“The main constraint on the development of projects is now securing commitments from creditworthy companies to either purchase LNG on a FOB basis or to toll gas through the facility, which is the preferred option for most of the projects now at the planning stage,” Flower explained. “It is clear that securing binding long-term commitments from creditworthy companies is proving to be difficult.”

In East Africa, ENI and Anadarko were expected to make FIDs by the end of 2016. Construction would take three to five years to 2020 or 2022. Anadarko and its partners in Block 1 offshore Mozambique, and ENI and its partners in Block 4 have more than 150 trillion cubic feet of recoverable reserves discovered.

The Anadarko joint venture (JV) had signed 20-year, non-binding heads of agreement (HOA) for 8 MMmt/y total with buyers in Singapore, Japan, China, Thailand and Indonesia. The JV’s initial plans call for two trains, each with a capacity of 6 MMmt/y. The JV is working to turn the HOA into sales and purchase agreements (SPAs).

The company expected minimal funding in 2016 while working in parallel to secure the legal and contractual framework to develop LNG in Mozambique, financing for the first two trains and related infrastructure and long-term LNG SPAs.

On Oct. 4, ENI East Africa SpA and its partners in Block 4 signed a 20-year binding LNG SPA for more than 3.3 MMmt/y with BP Poseidon Ltd. for the sale of the LNG produced by the Coral South Floating LNG facility, which will be installed offshore Mozambique.

Claudio Descalzi, ENI’s CEO, said, “The signing of the Coral gas sale contract represents a key milestone toward commencing the project construction activities.”

With the acquisition of BG Group, Shell became the operator of blocks 1 and 4 offshore Tanzania. Shell and its partners, Ophir Energy and Pavilion Energy, started a two-well drilling program on Nov. 3 in the Mafia Deep Basin. The JV partners will invest about $80 million in the drilling program to meet the remaining exploration requirements per the exploration licenses issued by the Ministry of Energy and Minerals.

Pavilion and Shell were appointed to supply Singapore with its next tranche of LNG needed for power plants and industrial users, according to the Oct. 25 edition of the Singapore’s Business Times.

On Block 2 offshore Tanzania ExxonMobil and Statoil drilled a successful appraisal well on the Tangawizi discovery. The companies are continuing development planning, onshore site selection and commercial discussions about a potential joint LNG plant with nearby blocks.

The LNG market will end up deciding which projects will be winners in the 2023 market. Other projects will be looking at FIDs in 2025 or 2026 for the market in 2030.