Baker Hughes updates investors on expected multi-year growth in LNG and oil investment to meet demand

Tuesday, 10 May 2022
Free Read

Baker Hughes, the liquefied natural gas equipment-maker and energy services company, has told investors it was well positioned to capitalize on multi-year growth in LNG and new energy projects.

The company, which has main offices in Houston and London and is led by Chairman and Chief Executive Lorenzo Simonelli said it had an “exciting portfolio” of emerging energy transition technologies and solutions.

In its most recent earnings, Baker Hughes recorded strong orders from its Turbomachinery and Process Solutions (TPS) division and said the LNG order cycle continued to unfold.

The company believes that the industry has entered another constructive LNG cycle, which is being expedited by the current geopolitical situation, particularly for US LNG projects and it forecast that global liquefaction capacity could be expected to almost double by 2040.

“We have compelling growth profile driven by range of energy transition initiatives,” said Baker Hughes in a presentation to investors.

“Multiple areas could drive extended growth cycles over the next 5-10 years and beyond,” stated Baker Hughes.

Contracts

Baker Hughes was most recently awarded the contract for the LNG driver system for the first phase of US company Venture Global’s Plaquemines LNG project, located south of New Orleans on the Mississippi River in Louisiana.

The company said it now had orders booked for 150 million tonnes per annum of LNG capacity.

Baker Hughes has four divisions and in addition to LNG equipment through the Turbomachinery and Process unit it also offers oil field services, oil field equipment and digital energy solutions.

New LNG wave

“Gas fundamentals, particularly in Europe and Asia have tightened significantly. The current backdrop supports a new wave of LNG projects being sanctioned to fill the liquefaction capacity supply-demand gap,” it said,.

“there has also been a significant increase in long-term contracting activity and this has helped projects secure funding and progress to final investment decisions,” it noted.

In oil services, the company stated that sustained underinvestment had started to impact supply in the oil market.

“Capital discipline and the escalating focus on shareholder returns has restrained spending and ESG pressures have driven the strategies of major international oil companies away from fossil fuels,” said Baker Hughes.

It cited in particular the members of the Organization of Petroleum Exporting Countries.

“OPEC countries, struggling to meet quotas, have seen spare capacity shrinking and global oil inventories trending significantly below average,” said Baker Hughes.

The company stated that the demand recovery in oil and LNG is set to exceed pre-Covid-19 levels despite increasing pressure to reduce hydrocarbon consumption.

Baker Hughes said the spending surge was fuelled by strong economic recovery in developed economies and long-term structural growth in emerging economies.

Related Video

Free Read