A profound transformation looms on the horizon for the global liquefied natural gas (LNG) market as a colossal wave of new supply projects is slated for commissioning before the decade’s end. This burgeoning supply is poised to outpace demand growth, driven by the expansion of infrastructure and an ardent pursuit to reduce the carbon intensity of energy mixes across regions. As a result, the market is expected to face an oversupply, exerting significant downward pressure on prices. However, this scenario is fraught with uncertainties as project delays and sanctions on Russian LNG might shift the global supply timeline, injecting volatility into the market.
The supply glut is anticipated to commence from 2027, albeit weaker than previously projected. The global LNG balance will shift from a tight market in 2025-26 to a progressively oversupplied state towards 2030. Bloomberg New Energy Finance (BloombergNEF), a premier consulting organisation, forecasts global demand to reach 560 million metric tons by 2030, approximately 63 million tons shy of the expected supply. The extent of this oversupply, however, is tempered by delays in LNG project completions and sanctions on Russia.
Benchmark Asia spot LNG prices are expected to face mounting downward pressure from 2027 as demand growth lags behind supply increases. Yet, price volatility will persist, influenced by the timely completion of ongoing projects and geopolitical dynamics surrounding Russian sanctions. Europe’s reliance on LNG, constituting 43% to 44% of its total gas supply from 2026 to 2030, further complicates the price stability, leaving the market susceptible to unplanned supply outages and weather variations.
Decarbonisation efforts, infrastructure expansion, and stagnant or declining domestic output will steadily drive LNG demand, particularly in Asia. Industrial and power sectors, propelled by emissions reduction initiatives, alongside expanding gas pipelines and new import terminals, will underpin this growth. Conversely, Europe’s LNG demand is set to rise temporarily due to coal phase-outs but will subsequently decline.
Noteworthy risk factors for Asia’s demand include potential lower pipeline exports from Central Asia to China, delayed nuclear restarts in Japan, and tighter coal efficiency targets. On the supply front, the US and Qatar are poised to lead with substantial additions, potentially raising the global supply to 623 million tons by 2030, provided high-probability projects are approved.
The market’s equilibrium is precarious, with supply estimates highly exposed to delays and sanction risks. BloombergNEF analysis suggests significant supply volumes could be deferred to later years if project timelines slip, exacerbating market tightness. Additional sanctions on Russia could remove a considerable portion of supply, potentially accelerating the approval of US projects.
Asia’s uncontracted LNG demand is expected to more than quadruple by 2030, driven by markets like South Korea, Taiwan, India, and Thailand. European buyers will similarly see a 40% rise in uncontracted demand, indicating a strategic shift as importers anticipate a buyer’s market with more favourable terms.
In sum, the global LNG market is on the cusp of a transformative era. While an oversupply looms, the market’s trajectory remains subject to the vagaries of project completions and geopolitical tensions. The interplay of supply and demand dynamics will invariably shape the landscape, heralding an era of heightened volatility and strategic recalibrations.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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