Wooden Mackenzie: International LNG market wants 90 million tpy of further provide by 2035 to fulfill booming demand

Talking at Wooden Mackenzie’s Gasoline, LNG and the Way forward for Vitality 2023 convention, Di Odoardo informed delegates that there is no such thing as a finish in sight to the present unstable market dynamics at present in place.

“There is no such thing as a speedy remedy as most provide beneath development is not going to be out there till not less than 2026,” Di Odoardo stated. “In consequence, consumers nonetheless face some years of excessive – and unstable – costs earlier than the following wave of LNG provide rebalances the market and improves affordability.”

Di Odoardo added that latest market dynamics are a stark reminder of how vulnerable power markets are to exterior shocks, together with battle, geopolitical tensions, and provide disruption.

“The worldwide fuel market has staged a outstanding restoration since Russia’s invasion of Ukraine in early 2022 however stays simply spooked,” Di Odoardo added. “The battle in Israel/Gaza, potential pipeline sabotage within the Baltics and the specter of strike motion at Australian LNG amenities all pushed spot costs up 35% by October.”

Market volatility ‘a continuing’

Di Odoardo added {that a} document 200 million tpy of latest provide is beneath development as gamers guess large on Asia’s push to scale back its dependence on coal and Europe’s want to switch Russian fuel. Nonetheless, he added that with Europe more and more depending on LNG, and with restricted flexibility from pipeline imports and coal, Europe and Asia will each depend on international LNG availability. This can expose the market to contin-ued value volatility.

“At occasions of extra LNG provide, costs might be extraordinarily low because the market tries to soak up extra LNG than required, presumably testing the economics of US LNG,” Di Odoardo commented. “However as markets tighten, for examples throughout chilly winters throughout the Northern Hemisphere, costs might be extraordinarily excessive as each Europe and Asia scramble to safe marginal cargoes which means volatility will persist additionally after the market has rebalanced within the second half of this decade.”

LNG suppliers assured about European demand

Di Odoardo additionally informed delegates that regardless of declining European fuel demand, the anticipated decline in home manufacturing and imports from Algeria as the last decade progresses, LNG demand throughout the continent is not going to peak till 2030.

“The latest signing of 8 million tpy of LNG contracts from Qatar and its companions Shell, TotalEnergies, and Eni to Europe by 2053 underpins provider confidence within the longevity of European LNG demand,” DI Odoardo furthered.

Asian demand set to double in South and Southeast Asia

Asia, the normal main marketplace for LNG, will see demand for the useful resource improve with imports into China and a number of other different rising markets within the area rising two-fold by 2030 Di Odoardo stated. He cited China as the important thing market and informed delegates that LNG demand will improve by 12% in 2023, whereas long run demand progress is underpinned by the 50 million tpy of LNG contracted over the previous two years. Different rising markets in Asia will even must grapple with declining home provide, boosting LNG import necessities. Nonetheless, he added that whereas elevated financial progress in Asia would be the main driver of LNG demand, that won’t be sufficient.

“Home insurance policies throughout Asia should improve their give attention to decarbonisation and guarantee applicable pricing and infrastructure developments,” Di Odoardo concluded. “LNG builders should additionally play their half, making certain inexpensive LNG provide if Asia’s full potential is to be unlocked.”

Learn the article on-line at: https://www.lngindustry.com/special-reports/15112023/wood-mackenzie-global-lng-market-needs-90-million-tpy-of-additional-supply-by-2035-to-meet-booming-demand/