Investments in new LNG infrastructure are set to surge, reaching $42 bill annually in 2024, according to a report from Rystad Energy.
These greenfield investments are 200 times the amount in 2020 when just $2 bill was invested in LNG developments, due to the pandemic.
However, project approvals after 2024 are forecast to drop considerably, as governments transition away from fossil fuels and accelerate investments in low-carbon energy infrastructure.
New LNG projects are driven mainly by the short-term increase in natural gas demand in Europe and Asia, due to Russia’s war in Ukraine and ensuing sanctions and restrictions placed on Russian gas exports.
Spending on greenfield LNG projects this year and next will stay relatively flat, with $28 bill approved in 2021 and $27 bill in 2022. Investments sanctioned in 2023 will show a modest increase, nearing $32 bill, before peaking at $42 bill in 2024.
After this date, investments will decline and drop back to near 2020 levels reaching $2.3 bill in 2029.
Despite an expected jump in 2030, when project announcements are forecast to total nearly $20 bill, investment in greenfield LNG is unlikely to return to 2024 levels, as countries scale up investments in low-carbon technologies.
Global gas demand is expected to surge 12.5% between now and 2030, from about 4 trill cu m to around 4.5 trill.
Gas demand in the Americas will remain relatively flat up to 2030. In contrast, on the back of strong economic growth and pro-gas policies from governments, regional demand in Asia/Pacific will soar, growing 30% from about 900 bill to around 1.16 trill cu m by 2030.
The Americas – primarily the US – will account for 30% of cumulative gas demand by 2030, while Asia/Pacific will account for 25%, Rystad said.
Helped by this new infrastructure, total LNG supply is expected to almost double in the coming years, growing from around 380 mill tonnes per annum in 2021 to about 636 mill tonnes in 2030, with several major LNG projects already underway or in the pipeline. LNG production is predicted to peak at 705 mill tonnes per annum in 2034.
“Recent price surges in natural gas markets worldwide have somewhat constrained gas demand, triggering a resurgence of coal-fired power generation in many countries.
However, governments remain bullish on gas as an affordable, transition fuel for power in the coming years as demonstrated by the rapid growth in LNG infrastructure investments,” explained Palzor Shenga, Rystad Energy’s Vice President of Analysis.
