• The small-scale LNG (LNG) terminals directly use liquefied natural gas in its liquid form, instead of a conventional model of regasification before its introduction in the gas transmission grid. Technological advancements, development of supply infrastructure of LNG as a vehicular fuel, and other varied applications of LNG have provided a boost for market growth.
• The better energy cost benefits associated with small-scale LNG usage, power generation in remote areas, an increase in government support through tax benefits and financial initiatives would drive the growth of the global artisanal LNG market.
• Moreover, the implementation of International Maritime Organization’s global sulfur limit in marine fuels at 0.5% m/m worldwide from January 1, 2020, is further expected to compel ship operators to invest heavily into the adoption of LNG fuel. The environmental benefits offered by small-scale LNG terminals including a reduction in carbon gas emissions have also propelled market growth.
• The lack of receiving terminal infrastructure in developing regions, high capital expenditure costs, uncertainty over LNG fuel prices, and an expensive supply chain is likely to act as barriers to market growth.
• The global small-scale market is segmented by terminal type into liquefaction terminals and regasification terminals, with the liquefaction terminal segment is expected to grow at a higher rate in the forecast period driven by the demand of small-scale LNG supply in remote locations, in off-shore areas such as ships and islands, thereby reducing hurdles and streamlining the export process in a globally competitive market.
• Companies are also focussed on expanding their existing liquefaction facilities. For instance, in June 2018, Sempra LNG&M announced their plans to extend liquefaction facilities to the existing Energía Costa Azul (ECA) liquefaction terminal in Mexico. The regasification terminals are used for conversion of LNG gas from the liquid to gaseous state, most widely used during importation of small-scale LNG supply.
• By application, the market is segmented into marine fuel, heavy-duty vehicles fuel, Industrial power generation, and others. Bunkering and transportation of marine fuel form the bulk part of a market share regarding application owing to the implementation of stringent regulations aimed at reducing fuel emissions and use of small-scale LNG as fuel which has lower sulfur content.
• For instance, in June 2018, Total and Pavillion Energy signed an agreement to jointly develop an LNG bunker supply chain for marine vessels in the port of Singapore. The industrial power segment will also expect faster growth rate driven by the need for remote island-based countries in Southeast Asia and the Mediterranean Sea.
• The global small-scale LNG market is categorized by geography into North America, Europe, Asia-Pacific, South America, and Rest of the World (RoW).
• Europe is the leading region by market share owing to widespread use of small-scale LNG as an alternative to crude oil, enactment of federal regulations, especially pertaining to sulfur content in marine fuel and continued investment into the development of small LNG supply by key market players such as Royal Dutch Shell PLC, Engine SA, Gasum Oy, and Gazprom.
• Increased demand for power generation in off-grid remote locations such as islands in the Mediterranean Sea have also increased the supply of small-scale LNG.
• The region of Asia-Pacific is expected to witness faster growth rate during the forecast period with environmentally-driven increases in Chinese demand and better maintenance measures of nuclear power plants in South Korea significantly contributing to the rise in order.
• Additionally, Japan’s need to secure stable, inexpensive and clean alternative energy resources has driven the application of LNG in the country, making Japan the world’s biggest LNG consumer. The occurrence of seasonal uplift in spot shipping market originating from strong winter demand in Asia is also expected to boost overall market revenues.
• The global small-scale LNG market is dominated by key players such as Honeywell International Inc., The Linde Group, Engine SA, Dresser-Rand Group Inc., and Gazprom.
• The developing countries present opportunities for expansion to companies looking to enter the market and increase their global footprint.
• For instance, in 2017, USA-based Okra Energy acquired Cryogas, a Peruvian company specializing in the transportation and storage of liquefied natural gas (LNG), as well as the installation of satellite regasification plants.
• The company has also announced the installation of the small-scale liquefied natural gas facility in Peru, catering to the increasing demand for affordable and clean-burning fuel in remote and developing areas of the country.
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