Global LNG Investments Will Peak at US$42 Billion

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As the global energy crisis deepens and countries scramble to secure reliable energy sources, investments in new LNG infrastructure are set to surge, reaching US$42 billion annually in 2024, Rystad Energy research shows. These greenfield investments are 200 times the amount in 2020 when just US$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, reports LNG Industry.

Investing in LNG projects

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. Spending on greenfield LNG projects this year and next will stay relatively flat, with US$28 billion approved in 2021 and US$27 billion in 2022. Investments sanctioned in 2023 will show a modest increase, nearing US$32 billion, before peaking at US$42 billion in 2024.

After this date, investments will decline and drop back near 2020 levels to reach US$2.3 billion in 2029. Despite an expected jump in 2030 when project announcements are forecast to total approximately US$20 billion, investment in greenfield LNG is unlikely to ever return to 2024 levels, according to Rystad Energy, as countries scale-up investments in low-carbon technologies.

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 approximately 4 trillion m3 to approximately 4.5 trillion m3. Gas demand in the Americas will remain relatively flat up to 2030, according to Rystad Energy. In contrast, on the back of strong economic growth and pro-gas policies from governments, regional demand in Asia and the Pacific will soar, growing 30% from approximately 900 billion m3 to approximately 1.16 trillion m3 by 2030. The Americas – primarily the US – will account for 30% of cumulative gas demand by 2030, while Asia-Pacific will account for 25%.

Helped by this new infrastructure, total LNG supply is expected to almost double in the coming years, growing from approximately 380 million tpy in 2021 to approximately 636 million tpy in 2030, with several major LNG projects already underway or in the pipeline. LNG production is predicted to peak at 705 million tpy 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,” says Palzor Shenga, Vice President of Analysis with Rystad Energy.

Where is all this LNG coming from?

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 US$10 billion Golden Pass LNG project in Texas, US, 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 approximately 18 million tpy.

Venture Global’s Plaquemine’s LNG in Louisiana, US – a US$13.2 billion development sanctioned earlier this year – is expected to produce approximately 24 million tpy 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 approximately 1.8 million tpy of LNG from its Corpus Christi LNG facility, with deliveries from 2026 to 2050.

Elsewhere, Qatar, Mozambique, and Russia are playing catch-up. Qatar, already a major producer, aims to boost LNG export capacity to 126 million tpy by 2027 from a current 77 million tpy. International industry heavyweights ExxonMobil, Shell, TotalEnergies, Eni, and ConocoPhillips have been chosen to join state-owned QatarEnergy in the North Field East expansion project, which is set to raise capacity to 110 million tpy.

Russian volumes are primarily dependent on the successful completion of the Novatek-operated Arctic LNG 2 project, which is potentially in jeopardy as sanctions against Russia over the Ukraine conflict have led to delays in the commissioning of Train 2 and Train 3. Project partners TotalEnergies and JOGMEC have halted all financing related to the scheme in the Russia-Ukraine war, followed by the withdrawal of chemicals giant Linde as a contractor, Rystad Energy notes.

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. The project will provide approximately 150 million ft3/d of gas to the domestic market.

Projects that have been approved or are currently being developed will recover approximately 300 trillion ft3 of LNG, led by the US with approximately 97 trillion ft3, then Qatar with approximately 52 trillion ft3 and Russia at 50 trillion ft3. These top three nations hold approximately 70% of the total sanctioned, yet-to-be-produced global LNG resource, according to Rystad Energy.

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Source: LNG Industry

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