1. Small-scale LNG in Asia Pacific
37th USAEE/IAEE NORTH AMERICAN CONFERENCE Denver, Colorado, USA
4 November 2019
Diego RIVERA RIVOTA, Researcher

2. APEC addresses energy challenges
APEC Members
Australia
Brunei Darussalam
Canada
Chile
China
Hong Kong, China
Indonesia
Japan
Korea
Malaysia
Mexico
New Zealand
Papua New Guinea
Peru
Philippines
Russia
Singapore
Chinese Taipei
Thailand
United States
Viet Nam
The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum, established in 1989, and headquartered in Singapore. (Mexico joined in 1993).
Its primary goal is to support sustainable economic growth and prosperity among its 21 members by accelerating regional economic integration.
The APEC Energy Working Group is the focal point for work on energy.

3. Asia Pacific Energy Research Centre
APERC is the energy research arm of Asia-Pacific Economic Cooperation (APEC)
Researchers from 16 of APEC’s 21 economies
Located in Tokyo, Japan
Two flagship publications
Annual Energy Overview
Triennial Energy Demand and Supply Outlook
APERC is the energy research arm of APEC.
The research team currently includes researchers from 16 of APEC’s 21 economies
Two flagship publications:
Annual Energy Overview
Triennial Energy Demand and Supply Outlook

4. 1- What is small-scale LNG?
Small-scale LNG refers in general to LNG-related facilities (receiving terminals, storage units, vessels, etc.) of similar characteristics but with a lower magnitude than conventional LNG infrastructure.
Not yet a clear and commonly accepted definition of SSLNG.
This study follows the International Gas Union (IGU) criteria:
Liquefaction and regasification capacity <1.0 million tonnes per annum (mtpa)
Vessels with a <60,000 m3 capacity (vs Q-Max, 216,000 m3)
Sources: IGU 2019, and

5. 1- Why is SSLNG relevant? SSLNG advantages SSLNG disadvantages
Lower initial investment and faster construction
Better accessibility and operational flexibility
SSLNG disadvantages
Greater supply chain complexity
Greater exposure to price uncertainty
Sources: IGU 2015,

6. 2- SSLNG currently and its uses
The market size for small-scale LNG is estimated to be at least 20 million tons.
Compared with conventional LNG, small-scale LNG is used in a wide range of fields:
fuel for power generation;
land and marine transportation;
residential and industrial uses in remote areas.
Natural gas is a less polluting alternative to oil for power generation and industrial uses in remote areas and on outlying islands.
Supply can come online in a relatively shorter period.
Accessibility to remote places with no access. to pipelines or large-scale LNG.
Logistics and operational flexibility.
Sources: IGU 2015, and

7. 2- SSLNG and LNG as a bunkering fuel
In the transportation sector, compressed natural gas (CNG) is currently used in a variety of places across the globe, while LNG as a transportation fuel has grown in recent years in China and the United States, mainly for long-haul trucks.
LNG is a potential fuel for marine vessels given the impact of the 2020 International Maritime Organization’s (IMO) SOx emission regulations.
The implementation of these regulations may further boost LNG as bunkering fuel.
Sources: “International Transport Forum,” OECD and “LNG Bunkering Infrastructure Survey 2014,” Lloyd’s Register

8. APEC accounts for 56% of global gas demand
World and APEC primary demand for natural gas,
In 2016, the APEC region accounted for more than half (56%) of global gas consumption.
, three out of the four main gas producers are APEC members (the United States, Russia and Canada) and more than half (57%) of global gas is produced in the region.
In terms of trade, the APEC region has some of the most active gas trade dynamics in the world, including three of the top five world exporters (Russia, the United States and Canada) and three of the top five world importers (Japan, China and the United States). In 2016, APEC as a whole was a natural gas net exporter; 70% of gas exports were piped while the remainder was LNG.
More than half of global gas is produced in the APEC region, with three out of the four top producers being APEC members.
Sources: International Energy Agency (IEA), World Energy Balances 2018; Asia Pacific Energy Research Centre, Energy Balance Table

9. APEC TPES increases by 22% through 2050
Total primary energy supply by fuel in BAU,
APEC natural gas supply grows by 57% over the Outlook period, reaching Mtoe by The share of natural gas in the APEC fuel mix also grows from 21% in 2016 to 27% in 2050,
Increased availability of low-cost supplies, coupled with the relatively low GHG emissions and air quality effects of natural gas (compared to other fossil fuels), are primary drivers of rising demand. Natural gas produces about half the CO2 emissions of coal and around 30% less than oil products. It also emits lower levels of other air pollutants such as sulphur oxides, nitrogen oxides (NOx), particulate matter (PM), carbon monoxide and mercury (IEA, 2017b).
IEA and IRENA as a bridge fuel.
Sources: APERC analysis and IEA (2018a).
APEC natural gas supply grows by 57% over the Outlook period. Its share also grows from 21% in 2016 to 27% in 2050.

10. The US and China keep leading growth
Total primary gas supply by sub-region,
The United States and China have historically driven APEC natural gas growth.
US, total primary gas supply grew by 28% over the last decade,
China showed remarkable supply growth of 346%,, and now have the third-largest total gas supply in APEC, behind the United States and Russia
BAU , gas at least 10% of TPES in every APEC economy by 2050, with the exception of the Philippines.
APEC gas supply grows by around 60%. While the United States and China dominate growth, 19 of the 21 APEC economies show total gas supply growth from 2016 to 2050.
In China almost 4X by 2050 , mainly power generation and, to a lesser extent, industry, almost x4 by 2050 at 627 Mtoe, which leads gas supply growth in the APEC region. Natural gas supply in the United States increases by 38% to reach 899 Mtoe in 2050 and is mainly driven by increases in gas-fired power generation. Russia total supply grows 16%, reaching 423 Mtoe by 2050.
OAM , total primary gas supply increases by 48% to 259 Mtoe by 2050.This is led mainly by growth in Mexico’s power generation sector and Canada’s energy-intensive oil and gas upstream industry.
SEA sees 51% growth to 201 Mtoe by 2050, surpassing north-east Asia in However, significant uncertainty investment in infrastructure needed to increase gas supply, competition with low-cost coal and some economies’ policies supporting coal for power generation.
NEA increases modestly (12%), resulting mainly from the mixed effect of decreasing demand in Japan and demand growth in Korea, an important contrast in this subregion compared with the last decade’s growth rate of 52%.
Sources: APERC analysis and IEA (2018).
Total gas supply grows in all APEC economies and gas represents at least 10% of TPES in every APEC economy by 2050.*
*Two exceptions for growth: Japan and New Zealand; and the Philippines for TPES share by 2050.

11. APEC LNG trade expands and diversifies drastically
APEC LNG import and export capacity by region in the BAU, TGT and 2DC,
LNG trade in APEC increases across all scenarios.
Historically, APEC LNG exports were dominated by SEA (Indonesia, Malaysia and Brunei-Darussalam) and Australia sending natural gas to traditional north-east Asian importers such as Japan, Korea and Chinese Taipei.
With a 60% increase in Australian LNG exports since 2000 and the arrival of significant new LNG exporters in the APEC region in recent years, such as the United States and Russia trade patterns have become more diversified. Moreover, on the demand side, LNG imports from China grow at a booming 7.0% CAGR,.
Relatively new LNG importers such as Thailand, Mexico, and Chile, and soon-to-be Philippines and Viet Nam, further diversification.
By 2030, the majority of natural gas exports in APEC come from and the United States, where at least 200 bcm (180 Mtoe) of liquefaction capacity begins operation between 2020 and Australia, the United States and Qatar are projected to become the world’s three largest LNG exporters (IEA, 2018b).
By 2050, the United States becomes the largest LNG exporter in the APEC region with an impressive 11% (CAGR) AUS and then Russian LNG exports which grow at a 6.4% CAGR. These three combined account for 83% of APEC LNG exports by 2050.
Sources: APERC analysis and IEA (2018).
The US, Australia and Russia emerge as dominant LNG exporters while booming Chinese LNG imports drive APEC LNG import growth.

12. SSLNG in Indonesia
In Indonesia, SSLNG may be a substitute for aging oil-fired power generation on islands.
In Bali, an SSLNG facility and a gas-fired power plant, is already in operation.
Price competitiveness, environmental and economic benefits.
+17,000 islands, 30 GW of coal-fired capacity and 6 GW of oil-fired capacity.
In 2050, 2.5x gas demand growth and LNG imports at around 39 bcm.
Sources: APERC analysis, S&P Platts and

13. SSLNG in China
China leads SSLNG capacity with around 15 mtpa in over 200 SS liquefaction facilities.
China’s gas supply includes domestic production and imports by pipeline and via LNG.
However, most small-scale liquefaction plants are found in major gas and coal producing areas of the northwestern and central provinces.
SSLNG is an alternative for inland consumers and regions with no access to gas pipelines.
The transportation sector has the largest potential for SSLNG. The number of LNG-fueled trucks is rapidly increasing.
Demand is also increasing for LNG as a fuel for marine vessels.
More than 40 LNG-bunkering terminals are to be built in China by 2020.
Sources: Kunlun Energy Company and IGU 2015 .

14. SSLNG in Chile
Chile covers most of its gas supply through LNG imports since Chile has 2 LNG terminals and a limited pipeline network.
Chile’s LNG demand is projected to grow by 16% through 2050, but with growth conditioned to infrastructure development.
Since 2011, Peru started a SSLNG project that transports LNG via trucks from its receiving terminal, LNG Quintero in Valparaiso region, to the Pemuco receiving terminal, located 535 km south.
The regasified volumes in the Permuco terminal are injected in the pipeline network and mostly consumed at the Bio Bio refinery.
Source:APERC analysis, ENAP, 2019

15. SSLNG in Chinese Taipei
Chinese Taipei imports 99% of it gas supply via LNG, and is a traditional LNG supplier (17 bcm).
Most of LNG demand is driven by power generation (82%).
Chinese Taipei has no pipe interconnection and only 2 receiving terminals.
LNG imports are projected to grow 25% to 2025, largely dependent on the electricity generation matrix (nuclear phase-out, 2025).
Due to growing demand and limited infrastructure, there is opportunity for SSLNG development.
Sources CPC, Taipower, 2019.

16. SSLNG in Malaysia Malaysia is a traditional net LNG exporter.
However, due to plateauing gas production and rising demand, LNG imports are projected to increase, and double by 2035.
Given the geography of Malaysia, SSLNG could be a supply option to isolated regions.
Particularly important for electricity generation in Borneo, where aging oil and coal-fired plants could be displaced to meet growing demand.
Electricity demand is projected to grow by 38% in 2030.
Sources:OECD/IEA 2017 Southeast Asia Energy Outlook, IEA

17. SSLNG in Viet Nam
Gas demand doubled from 2005 to 2015; production stagnant and is projected to have a modest growth towards 2030.
However, New Zealand and Viet Nam are the only two APEC members that do not trade gas.
Electricity demand projected to almost double by and industry also growing robustly,
Moreover, the geography of Viet Nam makes SSLNG an even more attractive option for gas supply.
Gas vs LNG in Southeast Asia?
Sources: MOIT, 2019

18. Conclusions
One of the main challenges of expanding small-scale LNG in the Asia- Pacific region will be the relative price competitiveness of LNG versus petroleum products and coal.
LNG pricing structure in Asia mostly determined by crude oil’s price.
Saving costs on the infrastructure development of SSLNG is a key factor for its competiveness (standardization, modularization, etc.).
Optimizing logistics such as associated infrastructure for SSLNG receiving terminals, pipeline networks, satellite terminals, roads quality, safety, etc
Coordination among multiple stakeholders:
Governments
LNG companies
End-users (power generators, industries, etc.)
Local authorities

19. Thank you for your attention! diego.rivera@aperc.ieej.or.jp