The import prices, infrastructure and flows into South Africa will change dramatically over the next decade, according to Chris Bredenhann, Partner and Director at PWC, who spoke at today's Oil & Gas Conference.

Project final investment decisions (FID) have gone into steep decline over the past six years so that has affected the market and it will mean winners and losers but while exploration will continue, the cost of getting it out of the ground has to be make as economic as possible.

He told delgates

The profiling overtime of FIDs indicates a significant downward trend;
• Only two FIDs were taken during the year (2016), one in Indonesia (Tangguh) and one in the US (Elba Liquefaction)
• In 2016 just 6 mtpa of new liquefaction capacity was sanctioned - this is the lowest volume of yearly project sanctions since 2008 - compared with an annual average of around 26 mtpa over the previous five years.
• Similarly, new contracts – a key prerequisite and leading indicator of future FIDs – have plummeted since 2015 and stayed at rock-bottom levels in 2016.

This points to continued low FIDs into 2017.
• Woodmac predicts that small LNG projects will be the big winners in 2017 – with just three LNG-export proposals to reach FID this year
• These 2017 FIDs are:
1. Mozambique’s Coral FLNG project (3.3 mtpa)
2. Equatorial Guinea’s Fortuna FLNG project ( 2.2-2.5 mtpa)
3. Woodfibre LNG in Canada (2.1 mtpa)

None will produce their first cargoes before 2020.

But he told them New LNG buyers are entering the market, with all buyers demonstrating changed behaviours, and this is where anyone involved in the market needs to be aware with crude oil prices set to remain 'lower for longer' that will affect investment and LNG prices.

Buyer behaviour is changing, he told the conference, and there are for key areas:

• Buyers are re-exporting volumes into the spot market
Renegotiating for more favourable contract terms
• Expect better terms for any new supply contract discussions
• Exploring purchasing partnerships

LNG has slowed and the market will transform, but there is still profit to be made, he concluded.

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