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LNG Projects:Essential Questions Investors Should Ask

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LNG has, over the last couple of decades, proved to be a reliable transition fuel due to its low environmental impact compared to other fossil fuels. In this light, multi-million dollar LNG projects around the world are spearheading the global energy sector’s transition to net-zero GHG emissions. On top of driving the adoption of clean energy, new LNG projects are also driving socio-economic development in regional and rural communities.

Notable LNG Projects around the World and their Benefits to Local Communities

1.Energía Costa Azul liquefaction project, Baja California, Mexico

This project by Energía Costa Azul (ECA Liquefaction) is ongoing and is capped at US$2bn. ECA Liquefaction operates an LNG terminal in Baja California state, so the upcoming liquefaction facility will be an expansion of the existing facility. Once complete, the facility will be able to liquefy approximately 36.8 million cubic meters of natural gas per day.

Being among the biggest private investments ever seen in Baja California, this liquefaction plant will have a huge impact on the region’s economy. For starters, Baja California and Mexico as a whole will benefit from revenues raised through LNG exports. The private investment will also generate thousands of jobs for the local labor market, more tax revenue for the local government, and social investment programs.

2.AG&P’s city gas distribution networks in India

Atlantic Gulf & Pacific Company of Manila (AG&P), a Philippines-based global gas logistics company, plans to build city gas distributions worth around US$1.4 billion in India. AG&P is also in the process of building CNG stations for vehicles, fully supported by its robust pipeline infrastructure in India. These projects are currently ongoing and are set to continue over the next eight years.

The key benefit of this project is that it will deliver gas to the end consumer in a more efficient and convenient way. The project also brings additional foreign investment in India as well as new employment opportunities for the locals. AG&P, under the stewardship of Joseph Sigelman, continues to develop skills and promote career growth in India and Asia at large. That’s on top of championing the region’s transition to clean natural gas.

3.Suape LNG terminal, Pernambuco, Brazil

This project by Hygo Energy Transition Brasil involves the installation of a new LNG vessel that’s approximately 290m in length. The 344-million dollar project will increase efficiency at the Suape port, making it easier for the vessel to feed LNG into trucks for distribution. It will improve the gas supply infrastructure in Pernambuco and enhance power generation within a 1,000km radius. Industries, businesses, CNG/LNG stations, and residential houses in Pernambuco will be the biggest beneficiaries.

Brazil consumes more energy than any other country in Latin America. With projects like this one, the country is getting cleaner fuel for its electricity generation. That means better quality air for the highly-populated nation. More NLG imports will also cement Brazil’s place as the largest economy in South America.

Essential Questions Upcoming LNG Investors Should Ask

If you intend to invest in the budding LNG sector, these questions will help you make the best investment decision.

What’s fueling the increasing attention on natural gas?

Two reasons. First, transporting natural gas across the sea has always precipitated logistical and environmental challenges. That’s because gas can only be transported by pipelines. Converting it to liquid (LNG) solves such logistical challenges as it can be shipped via trucks or specialized ships. Secondly, the current geopolitical conundrum in Europe, precipitated by the Russian invasion of Ukraine, is crippling the crude oil sector. Crude oil’s supply chain has been severely disrupted, which leaves liquefied natural gas as the most reliable/available fuel. And with its obvious environmental benefits, the demand and usefulness of LNG are likely to skyrocket in the coming years.

For the project you wish to invest in, does it have the potential for longevity?

As with any other investment, your investment in LNG will take several years to materialize. With the world transitioning to carbon-free energy, the future of fossil fuels is bleak. That includes NLG, as it is only a transition fuel that will be replaced by renewable energy in about 100 years’ time. You need to invest in LNG projects that have longevity; whose business models and paybacks align with the future of the global energy sector. You don’t want to put your money into a project that will potentially be obsolete in a decade, for example.

Does LNG have an environmental footprint?

All energy sources have an impact on the environment. What varies is the magnitude of the impact. Natural gas and LNG have a significantly lower carbon footprint than other fossil fuels. It burns with about 30% fewer GHG emissions than fuel oil and 45% fewer than coal.

Is the project keen on minimizing supply chain emissions?

If the project has modern production, liquefaction, and distribution technology, its carbon footprint will be minimal. Also, natural gas consists of 85-95 percent methane. The distribution pipelines and trucks also need to be installed with world-class technology for monitoring and reporting methane leakages, if any. That’s how the project can achieve near-zero methane emissions and climate impacts.

Final word

Ongoing LNG projects are improving the existing infrastructure in order to deliver an uninterrupted supply of this precious commodity to the end user. Households, commercial, and industrial LNG customers stand to benefit in a big way as more investors and new technologies enter the industry.

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