UK-based energy giant BP is planning to double the size of its global LNG portfolio to 30 mill tonnes per year by 2030, according to CFO, Murray Auchincloss.
This is part of the company's new low-carbon strategy, he explained.
Downstream gas supplies remain a key element of BP's new strategy despite a pledge to cut upstream production sharply in the coming years to focus on low-carbon energy supply, including renewables, bio-energy and hydrogen.
Speaking to analysts, Auchincloss said BP's current LNG portfolio was around 15 mill tonnes per year, made up of equity and merchant volumes in a roughly 50:50 split.
"So we're going from about 15 mill tonnes per year now to 25 mill by 2025 and 30 mill by 2030," he said.
The key to this expansion would be decisions taken about the mix of equity LNG versus merchant LNG. "That is really the big thing that we'll have to work our way through," he said.
BP has increased its involvement in merchant LNG in recent years by agreeing offtake from projects in which no equity is held, such as an agreement to buy LNG from Mozambique’s Eni-operated Coral LNG facility.
"We've got a great merchant portfolio now where you can take advantage of arbitrage and move things across locations," Auchincloss said.
He said the big decision for the coming decade is how to build up its equity LNG position and make projects competitive, citing projects, such as Browse LNG in Australia, the Tortue LNG project offshore Mauritania and Senegal, and the Tangguh LNG project in Indonesia.
"Can we get Browse off the ground with a low enough carbon content that the government and partners are happy? Can we do the next wave of LNG in Mauritania/Senegal, can we make it competitive enough?.
"The challenge for our teams is how do we make sure that our own equity [LNG projects] - the Browses of the world, the Mauritania/Senegals of the world, the Indonesias of the world - are low-cost and competitive against Henry Hub exported [LNG], with the right carbon footprint. Or should we instead move to merchant [LNG] where you don't have to deploy that capital? That's a choice ahead of us," he said.
Auchincloss - who said that the global gas market is likely to remain "materially oversupplied" in 2020 - also revealed that BP expected its Ghazeer gas project in Oman to start up this year ahead of schedule.
Ghazeer - the second phase of Oman’s giant Khazzan gas field - had been expected to start up in 2021 and is forecast to produce an additional 0.5 bill cu ft per day of gas and over 15,000 barrels per day of condensate.
