Investments in new LNG infrastructure are set to surge, reaching $42 bill annually in 2024, Rystad Energy said in a new report.
These greenfield investments will amount to 200 times the level seen in 2020 when just $2 bill was invested in LNG projects, due to the pandemic.
Conversely, project approvals after 2024 are forecast to fall off a cliff, as governments move away from fossil fuels and accelerate investments in low-carbon energy infrastructure.
New LNG projects are driven mainly by a short-term increase in natural gas demand in Europe and Asia, due to Russia’s war in Ukraine.
Spending on greenfield LNG projects this year and next will stay relatively flat, with $28 bill approved in 2021 and $27 bill this year. Investments sanctioned in 2023 will show a modest increase, nearing $32 bill, before peaking at $42 bill in 2024, Rystad’s research showed.
After this date, investments will decline and drop back to near 2020 levels going down to $2.3 bill in 2029. Despite an expected jump in 2030 when project announcements are forecast to total nearly $20 bill, investments are unlikely to return to 2024 levels, as countries scale up low-carbon technology projects.
Natural gas is a core component of many countries’ power generation systems and, although there is a move to reduce fossil fuel dependency and transition to a low-carbon power mix, demand for LNG is set to grow over the short term.
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.
However, in contrast, on the back of strong economic growth and governmental pro-gas policies, regional demand in Asia/ Pacific will soar, growing 30% from about 900 bill cu m to around 1.16 trill cu m by 2030.
The Americas – primarily the US – will account for 30% of the cumulative gas demand by 2030, while Asia/Pacific will make up 25%.
Supply to double
Helped by 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.
The US is set to solidify its place as a top LNG exporter, as increased domestic supply and higher prices in Europe and Asia encourage operators to sell gas overseas.
For example, the $10 bill Golden Pass LNG project in Texas, a joint venture between QatarEnergy (70%) and ExxonMobil (30%), is expected to start production by 2024, adding export capabilities to the Sabine Pass LNG terminal totalling around 18 mill tonnes per annum. Venture Global’s Plaquemines LNG in Louisiana – a $13.2 bill development sanctioned earlier this year – is expected to produce about 24 mill tonnes and start up in 2025.
Playing catch up
Elsewhere, Qatar, Mozambique and Russia are playing catch up. Qatar, already a major producer, aims to boost LNG export capacity to 126 mill tonnes by 2027 from its current 77 mill tonnes. Energy heavyweights, ExxonMobil, Shell, TotalEnergies, Eni and ConocoPhillips are to join state-owned QatarEnergy in the North Field East (NFE) expansion project, which is set to raise capacity to 110 mill tonnes per annum.
Russian volumes are primarily dependent on the successful completion of the NOVATEK-operated Arctic LNG 2 project, which could be in jeopardy, as sanctions against Russia over the Ukraine conflict have led to delays in the commissioning of Trains 2 and 3.
Project partners TotalEnergies and JOGMEC have stopped the financing related to the scheme, which was followed by the withdrawal of contractor Linde.
In Africa, Mozambique will see its first LNG production by the end of 2022 via the under-development, Eni-operated Area 4 (Coral South) LNG project. This project will provide around 150 mill cu ft per day of gas to the domestic market.
Projects that have been approved or are currently being developed will recover about 300 trill cu ft of LNG, led by the US with approximately 97 trill, then Qatar with about 52 trill and Russia at 50 trill cu ft.
These three countries alone hold around 70% of the total sanctioned, yet-to-be-produced global LNG resource, Rystad said.
