LNG

The International Energy Agency said that the “fraught situation in the Middle East comes 50 years after the oil shock” that led to the founding of the Paris-based IEA itself by the Organisation for Economic Cooperation and Development and the agency has just issued its mixed World Energy Outlook 2023.

The IEA said the instability facing Israel and its neighbours was creating further uncertainty for an “unsettled global economy that is feeling the effects of stubborn inflation and high borrowing costs” in 2023.

The WEO of 2023 highlights include one area of global energy markets, natural gas, that was hit particularly hard by the global energy crisis.

“Natural gas markets have been dominated by fears about security and price spikes after Russia cut supplies to Europe and market balances have remained precarious,” said the IEA.

“But an unprecedented surge in new LNG projects coming online from 2025 is set to add more than 250 billion cubic metres per year of new capacity by 2030, equivalent to around 45 percent of today’s total global LNG supply,” the report explained.

The strong rise in capacity is expected to ease prices and gas supply concerns, though also risks creating a supply glut, given that global gas demand growth has slowed considerably.

“As a result, Russia will have very limited opportunity to expand its customer base. Its share of internationally traded gas, which stood at 30 percent in 2021, is set to drop to half of that by 2030,” the IEA noted.

Variables

The IEA Outlook considered in detail a major variable for energy markets in the coming years. 

“China, which has an outsize influence on global energy trends, is undergoing a major shift as its economy slows and undergoes structural changes,” said the IEA.

“China’s total energy demand is set to peak around the middle of this decade, the report projects, with continued dynamic growth in clean energy putting the country’s fossil fuel demand and emissions into decline,” the agency forecast.

The IEA also forecasts that there are set to be almost 10 times as many electric cars on the road and with renewable energy sources nearing half of the global power mix.

“The phenomenal rise of clean energy technologies such as solar, wind, electric cars and heat pumps is reshaping how we power everything from factories and vehicles to home appliances and heating systems,” it argued.

The WEO 2023 report describes an energy system in 2030 in which clean technologies play a significantly greater role than today. 

It predicts that there will be three times as much investment going into new offshore wind projects than into new coal-fired and gas-fired power plants.

“All of those increases are based only on the current policy settings of governments around the world. If countries deliver on their national energy and climate pledges on time and in full, clean energy progress would move even faster,” it concluded.

Venture Global LNG, owner of the newest US export plant at Calcasieu Pass in Louisiana and with three other projects in development, has signed up Malaysian energy company Petronas for a 20-year supply deal.