US energy services firm Baker Hughes remains optimistic on the LNG outlook and still expects the market to exceed 65 mtpa of FIDs this year and should see a similar level of activity in 2024, according to the company’s CEO, Lorenzo Simonelli.
Following record LNG equipment orders of some $3.5 billion in 2022, Baker Hughes booked $1.4 billion in LNG equipment orders in the first quarter this year and $900 million in the second quarter.
During the second quarter, Baker Hughes secured an order for three main refrigerant compressors for NextDecade’s Rio Grande LNG project in Texas.
Simonelli said during the company’s second-quarter earnings conference call on July 19 that continued strength in long-term LNG contracts has been a key driver of the momentum in industry FIDs, which have now totaled 53 mtpa so far this year.
This includes the recent FIDs for Phase 1 of Next Decade’s Rio Grande project and QatarEnergy’s North Field South project, he said.
“Based on the continued development of the LNG project pipeline, we still expect the market to exceed 65 MTPA of FIDs this year and should see a similar level of activity in 2024,” Simonelli said.
2026 and beyond
Sinomelli said that Baker Hughes continues to see the potential for this LNG cycle to extend for several years with a pipeline of new international opportunities expanding project visibility out to 2026 and beyond.
He said that Baker Hughes fully expects natural gas and LNG to play a key role in the energy transition as a baseload fuel to help balance against intermittent renewable energy sources.
Baker Hughes believes the expanding pipeline of LNG opportunities is tied to the growing recognition of this reality and that the transition will take more time and must be financially viable, the CEO said.
“As you look at 2024 and 2025, you’ve got a number of extensions on brownfield projects activities and coming out of the LNG 2023 meetings last week in Vancouver, a lot of dialogue on the continued need for LNG,” Simonelli told analysts during the call.
“And we stay very much with the view that we’re going to need in excess of 800 mtpa by 2030, he said.
“And given some of the environment and situation in the marketplace, we’re seeing that pull forward with these FIDs coming in sooner,” Simonelli said.
“So it’s really a multiyear cycle where we see consistency in LNG FIDs. And you know the projects as well as I do. You’ve got opportunities from Cameron to Port Arthur to different elements of Commonwealth. You’ve got Tellurian, you’ve got a number of projects out there that are imminently looking at FIDs as we go forward,” he said.