IEA predicts record LNG demand to lower prices and spur demand
The International Energy Agency announced on Monday that a record amount of liquefied gas production capacity will be coming online by 2030. This is expected to change the dynamics of the gas market, strengthening global supply and easing pressures.
In its "Gas 2025", medium-term outlook, the IEA stated that by 2030, 300 billion cubic meters per year of LNG will be exported. This capacity is mainly in the United States and Qatar.
The Paris-based agency said that this translates to a potential increase in net LNG supply of 250 bcm per year by 2030.
It said that, "barring any unexpected disruptions," this would lead to lower prices and higher demand in the future.
The IEA stated that the Russian invasion of Ukraine 2022 triggered a shock to supply and pushed prices up to new records. Although global markets have slowly rebalanced themselves, prices are still above their historical levels and therefore, demand is being restrained.
According to the IEA's baseline scenario, gas demand is expected to increase by 1.5% per year between 2024 and 3030. This equates into 380 bcm absolute by 2030.
Nearly 30% of the growth will come from the Middle East as countries such as Saudi Arabia switch from oil to natural gas.
Keisuke Sadamori, director of the IEA’s energy markets and security division, stated in a press release that "the coming LNG wave will offer some relief for global gas market, which has been tight and volatile over several years."
He added that the elevated geopolitical and economic tensions left "no place for complacency", calling on global cooperation to guarantee supply security. This is especially true as electricity consumption will drive up gas demand.
The IEA warned that a prolonged period of lower LNG price could reduce investment incentives, and result in a possible tightening of the global gas market after 2030, particularly if demand grows faster.
(source: Reuters)
