Global LNG INVESTMENT TO PEAK AT $42 BILLION IN 2024

Aglobal quest for reliable energy sources, particularly in the wake of ongoing supply-chain disruption caused by the Russia-ukraine conflict, is resulting in higher investments in the new liquefied natural gas (LNG) infrastructure and it is likely to reach a peak level at $42 billion in 2024, a research report prepared by business intelligence firm, Rystad Energy says.

According to Rystad Energy, these greenfield investments are 200 times the amount in 2020 when just $2 billion was invested in LNG developments due to the pandemic.

However, project approvals after 2024 are forecast to fall off a cliff as governments transition away from fossil fuels and accelerate investments in low-carbon energy infrastructure.

The 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 and ensuing sanctions and restrictions placed on Russian gas exports, the Rystad report says.

“Spending on greenfield LNG projects this year and next will stay relatively flat, with $28 billion approved in 2021 and $27 billion in 2022,” the business intelligence firm says.

Investments sanctioned in 2023 will show a modest increase, nearing $32 billion, before peaking at $42 billion in 2024. After this date, investments will decline and drop back near 2020 levels to reach $2.3 billion in 2029. Despite an expected jump in 2030 when project announcements are forecast to total nearly $20 billion, investment in greenfield LNG is unlikely to ever return to 2024 levels as countries scale up investments in low-carbon technologies.

Natural Gas

According to the report, natural gas is a core component of many countries’ power generation systems and, although there is a determination 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 trillion cubic meters (TCM) to around 4.5 TCM.

While America’s gas demand will remain relatively flat up to 2030, the natural gas demand in Asia and the Pacific will grow 30% to 1.16 TCM by 2030 from the current 900 billion cubic metres (BCM), primarily on the back of strong economic growth and pro-gas government policies.

Although recent price surges in natural gas markets worldwide have somewhat constrained gas demand, governments remain bullish on gas as an affordable, transition fuel in the coming years proven by the rapid growth in LNG infrastructure investments, Palzor Shenga, vice president of analysis with Rystad Energy says.

The US to solidify top position

As per the report, 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.

The $10 billion 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 Mtpa, the reports while adding Venture Global’s Plaquemines LNG in Louisiana – a $13.2 billion development sanctioned earlier this year – is expected to produce about 24 Mtpa and start-up in 2025. In a move that may become more common in the crowded market, Cheniere Energy signed a deal with Chinese state giant Petrochina to supply around 1.8 Mtpa of LNG from its Corpus Christi LNG facility, with deliveries from 2026 to 2050.