Baker Hughes won $200 million in LNG equipment orders in Q1

US energy services firm Baker Hughes booked about $200 million of LNG equipment orders in the first quarter of this year, and the company expects global LNG FIDs to reach about 100 mtpa over the next three years.

Baker Hughes booked record $5.6 billion of LNG equipment orders in 2023 and $3.5 billion in 2022.

During the first quarter of this year, Baker Hughes secured an order from compatriot engineer Black & Veatch to supply the planned Cedar LNG project in Canada with electric driven liquefaction technologies.

“LNG equipment orders totaled almost $200 million during the quarter. Excluding LNG equipment, our IET business booked more than $2.7 billion of orders, the second highest of any quarter since the 2017 merger,” CEO Lorenzo Simonelli said during the company’s first quarter earnings conference call on Wednesday.

He said this was attributed to non-LNG gas tech equipment orders more than tripling from prior-year levels.

LNG growth

Simonelli said that “strong underlying natural gas demand will spur robust growth in LNG over the coming decades.”

Through the end of this decade, Baker Hughes expects demand to increase by “mid-single digits annually.”

“We believe this will support an installed nameplate capacity of 800 mtpa by 2030. Looking out to 2040, we expect LNG demand growth to continue, requiring further capacity additions beyond 800 mtpa,” he said.

“While there could be periods of price volatility driven by temporary dislocations in supply and demand over this time period, we see these as opportunities for accelerated demand creation LNG consumers, who tend to be very price sensitive, typically respond to lower prices with stronger demand,” Simonelli said.

“We have seen evidence of this recently. Global LNG demand is up 4 percent year to date, against the backdrop of an approximate 50 percent decline in LNG prices over the same period,” he said.

FIDs

Baker Hughes said in its quarterly report that near-term project FID sequencing was disrupted by the US moratorium on non-FTA LNG export approvals.

The company expects most impacted US projects to proceed in 2025 and 2026.

Simonelli said that Baker Hughes expects global LNG FIDs of about 100 mtpa over the next three years.

“This view, supported by customer dialogue and our internal LNG demand expectations, would result in our installed capacity increasing by 70 percent,” he said.

Simonelli said that this growing installed base brings “significant opportunities” for Baker Hughes across the lifecycle of the equipment.

“Like our industrial peers, our gas tech business typically generates more profitability on the less cyclical aftermarket services. For LNG equipment specifically, this accounted for less than 10 percent of our total company Ebitda last year,” he said.

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