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US and Qatar at the forefront of global LNG supply growth
2023/7/27
The United States and Qatar are the two distant frontrunners as LNG exporters and are best positioned to capture the global need for additional supply capacity over the next two decades.
This is Wood Mackenzie's estimate, and the abundance of low-cost natural gas resources in the world's two largest LNG exporters is a key factor in the growth of their export capacity.
In addition, Wood Mackenzie said that the United States and Qatar also have competitive prices and a "savvy commercial partnership", and the two countries will hold more than 60% of the LNG market share by 2040. Already, the two LNG export giants account for 40% of global supply. The U.S. and Qatar, will need to focus on three key factors in order to be at the forefront of the next wave of LNG supply growth, according to the consultancy. These include reining in costs, working to reduce carbon emissions from LNG projects and betting on continued growth in LNG demand in Asia.
LNG demand outlook is bullish
Massimo Di-Odoardo, Giles Farrer and Dulles Wang, gas and LNG experts at Wood Mackenzie, said the long-term outlook for global LNG demand is bullish. By the mid-2030s, the world will need an additional 100 million tonnes per year of LNG capacity to meet demand growth. This is a 25% increase compared to the current global LNG supply and has already been approved.
Experts at Wood Mackenzie said that in the long run, Asia will be the driver of LNG demand growth, although Europe is currently rushing to obtain LNG to replace imported pipeline gas, and even sign long-term contracts. Such long-term contracts are frowned upon in Europe until a geopolitical conflict erupts.
"Europe's policy shift away from gas limits the upside for LNG suppliers beyond 2030," Wood Mackenzie analysts said. "After that, Asian markets will be key as developing economies in the region There will be a greater reliance on natural gas while trying to move away from coal."
Earlier this year, Shell, the world's largest liquefied natural gas trader, said that a sharp increase in Europe's demand for liquefied natural gas will intensify competition with Asia in the short term and dominate LNG trade in the long run.
Shell said new LNG supplies - notably from Qatar and the US - would enter the market by 2025-2026, with a bullish run on the fuel until 2040. Shell noted that around 80% of new LNG supply capacity by 2030 will come from the two major LNG exporters.
However, the LNG supermajor warned that without new investment to boost supply, another supply-demand gap could emerge in the late 2020s.
Cost and Labor Challenges of the Next Wave of LNG Supply Boom
With interest rates and supply chain costs soaring, LNG developers will need to limit cost inflation in project development and execution. Wood Mackenzie said LNG developers who can do this will be better positioned to capitalize on the growth in global LNG demand.
Recruiting and retaining construction workers and operators for the next wave of U.S. LNG export facilities could be a challenge and raise the bar for projects, Paul Marsden, president of Bechtel Energy's global business unit, told Reuters earlier this month. cost. Bechtel Energy is one of the largest contractors in the industry.
Labor costs and work scheduling issues could add headwinds to the boom in U.S. LNG projects, which are already facing supply chain cost inflation and increased competition to secure long-term buyers and stable financing. Despite surging LNG demand and abundant U.S. natural gas reserves, the next wave of U.S. LNG exports could stall as costs soar and financing is complicated by rising interest rates.
Yet developers of U.S. LNG projects are set to approve an all-time high in LNG export capacity this year, even amid concerns about cost inflation.
Not long ago, NextDecade made a final investment decision on the first phase of a new LNG facility in Texas after securing $18.4 billion in financing. The first phase of the Rio Grande LNG project, which will consist of three liquefaction trains, has been awarded to companies including Shell, ExxonMobil, Total Energy, Engie, several Asian energy companies, Portugal's Galp and A long-term offtake commitment from buyers including Itochu Corporation, Japan.
In recent months, U.S. developers have signed a series of long-term LNG contracts, including long-term contracts from European buyers. In Europe, energy security has emerged as the highest-profile issue, while concerns about emissions from imported natural gas have taken center stage.
Still, low-carbon LNG with carbon dioxide capture is likely to attract more buyers in the coming years, analysts say.
Experts at Wood Mackenzie note: “As concerns about security of supply recede, buyers and governments are refocusing on reducing CO2 emissions. The industry must seize this opportunity: through the energy transition, reducing upstream, liquefaction and shipping emissions will Prolong LNG demand."
NextDecade's Rio Grande LNG project and Qatar's massive expansion project (the world's largest LNG project) both employ CO2 reduction technologies. The Rio Grande LNG project will have a planned carbon capture and storage project that will bring low-carbon-intensive LNG to the global market.
Qatar's massive LNG expansion plan also includes CO2 storage projects. Saad al-Khaabi, Qatar's Minister of State for Energy Affairs and President and CEO of Qatar Energy, said recently that "Qatar's LNG carbon intensity may be the lowest in the world".
This is Wood Mackenzie's estimate, and the abundance of low-cost natural gas resources in the world's two largest LNG exporters is a key factor in the growth of their export capacity.
In addition, Wood Mackenzie said that the United States and Qatar also have competitive prices and a "savvy commercial partnership", and the two countries will hold more than 60% of the LNG market share by 2040. Already, the two LNG export giants account for 40% of global supply. The U.S. and Qatar, will need to focus on three key factors in order to be at the forefront of the next wave of LNG supply growth, according to the consultancy. These include reining in costs, working to reduce carbon emissions from LNG projects and betting on continued growth in LNG demand in Asia.
LNG demand outlook is bullish
Massimo Di-Odoardo, Giles Farrer and Dulles Wang, gas and LNG experts at Wood Mackenzie, said the long-term outlook for global LNG demand is bullish. By the mid-2030s, the world will need an additional 100 million tonnes per year of LNG capacity to meet demand growth. This is a 25% increase compared to the current global LNG supply and has already been approved.
Experts at Wood Mackenzie said that in the long run, Asia will be the driver of LNG demand growth, although Europe is currently rushing to obtain LNG to replace imported pipeline gas, and even sign long-term contracts. Such long-term contracts are frowned upon in Europe until a geopolitical conflict erupts.
"Europe's policy shift away from gas limits the upside for LNG suppliers beyond 2030," Wood Mackenzie analysts said. "After that, Asian markets will be key as developing economies in the region There will be a greater reliance on natural gas while trying to move away from coal."
Earlier this year, Shell, the world's largest liquefied natural gas trader, said that a sharp increase in Europe's demand for liquefied natural gas will intensify competition with Asia in the short term and dominate LNG trade in the long run.
Shell said new LNG supplies - notably from Qatar and the US - would enter the market by 2025-2026, with a bullish run on the fuel until 2040. Shell noted that around 80% of new LNG supply capacity by 2030 will come from the two major LNG exporters.
However, the LNG supermajor warned that without new investment to boost supply, another supply-demand gap could emerge in the late 2020s.
Cost and Labor Challenges of the Next Wave of LNG Supply Boom
With interest rates and supply chain costs soaring, LNG developers will need to limit cost inflation in project development and execution. Wood Mackenzie said LNG developers who can do this will be better positioned to capitalize on the growth in global LNG demand.
Recruiting and retaining construction workers and operators for the next wave of U.S. LNG export facilities could be a challenge and raise the bar for projects, Paul Marsden, president of Bechtel Energy's global business unit, told Reuters earlier this month. cost. Bechtel Energy is one of the largest contractors in the industry.
Labor costs and work scheduling issues could add headwinds to the boom in U.S. LNG projects, which are already facing supply chain cost inflation and increased competition to secure long-term buyers and stable financing. Despite surging LNG demand and abundant U.S. natural gas reserves, the next wave of U.S. LNG exports could stall as costs soar and financing is complicated by rising interest rates.
Yet developers of U.S. LNG projects are set to approve an all-time high in LNG export capacity this year, even amid concerns about cost inflation.
Not long ago, NextDecade made a final investment decision on the first phase of a new LNG facility in Texas after securing $18.4 billion in financing. The first phase of the Rio Grande LNG project, which will consist of three liquefaction trains, has been awarded to companies including Shell, ExxonMobil, Total Energy, Engie, several Asian energy companies, Portugal's Galp and A long-term offtake commitment from buyers including Itochu Corporation, Japan.
In recent months, U.S. developers have signed a series of long-term LNG contracts, including long-term contracts from European buyers. In Europe, energy security has emerged as the highest-profile issue, while concerns about emissions from imported natural gas have taken center stage.
Still, low-carbon LNG with carbon dioxide capture is likely to attract more buyers in the coming years, analysts say.
Experts at Wood Mackenzie note: “As concerns about security of supply recede, buyers and governments are refocusing on reducing CO2 emissions. The industry must seize this opportunity: through the energy transition, reducing upstream, liquefaction and shipping emissions will Prolong LNG demand."
NextDecade's Rio Grande LNG project and Qatar's massive expansion project (the world's largest LNG project) both employ CO2 reduction technologies. The Rio Grande LNG project will have a planned carbon capture and storage project that will bring low-carbon-intensive LNG to the global market.
Qatar's massive LNG expansion plan also includes CO2 storage projects. Saad al-Khaabi, Qatar's Minister of State for Energy Affairs and President and CEO of Qatar Energy, said recently that "Qatar's LNG carbon intensity may be the lowest in the world".
"By 2029, when all our projects are up and running, 40% of all new LNG entering the global market will come from Qatar Energy," Al-Kaabi said.
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