By 2030, the world predicts an increase in LNG production by 70%

World production of liquefied natural gas (LNG) by 2030 will increase to 638 million tons against 380 million tons at the end of 2021. Such data are given in the review of September 8 “InfoTEK” with reference to the data of the analytical agency Rystad Energy.

The Americas, primarily the US, will account for about 30% of global gas consumption by 2030, and Asia for 25%. Data from the International LNG Importers Group (GIIGNL) show that 372 million tons of LNG were sold worldwide in 2021, of which more than 70% came from Asia. The GIIGNL data differs slightly from the Rystad Energy statistics due to the difference in calculation methods.

The review notes that despite the desire of many countries to reduce dependence on hydrocarbons, global demand for gas will continue to grow over the next 8 years. From 2022 to 2030 it will increase by 12.5% ​​- from 4 trillion cubic meters. m to 4.5 trillion cubic meters. m per year. Demand in the US market will grow much more slowly than in Asia, the authors of the survey point out. If consumption in the United States grows by only 5%, then in Asia it will increase by 30% and by 2030 will reach 1.16 trillion cubic meters. m per year.

30-35% of industrial gas consumption will be in the electric power industry, a little less than 30% in industry and about 15% in the domestic sector. In the first half of 2022, Europe has already doubled LNG imports compared to last year, to 59 million tons.

Growing demand for LNG, analysts continue, creates the necessary incentives to invest in new gas liquefaction capacities. In addition, further improvements in technology are expected, making even more projects technically and economically viable. While most LNG projects are onshore, the emergence of floating gas regasification and storage units (FRSUs) and floating LNG plants (FLNGs) is giving a powerful impetus to the development of offshore projects.

In Russia, the large-tonnage LNG project of Novatek, Arctic LNG-2, with a design capacity of 19.8 million tons per year, is currently at the stage of active implementation. So far, the company has not postponed the deadlines for the delivery of each of the three stages. Chairman of the Board, co-owner of Novatek, Leonid Mikhelson, at the EEF-2022 on September 7 specified that the first string of the LNG project would be launched in December 2023, the launch of the second is expected in 2024, the third – in 2026.

But analysts believe it is unlikely that in the current conditions of sanctions pressure after the start of a special military operation (SVO) in Ukraine and restrictions on the supply of gas liquefaction equipment to Russia, the project will be able to be implemented as planned. They attribute the risk of delays in terms primarily to the departure of the Arctic LNG-2 contractor, the German company Linde.

And the prospects for the Baltic LNG project with a capacity of 13 million tons per year, implemented by Gazprom and Rusgazdobycha on the basis of the parity joint venture Rushimalliance, are even “more vague,” the review says. The project, oriented to the European market, will face problems due to the EU’s policy of abandoning Russian energy resources, so its planned launch in 2025 will be, according to experts, postponed “until the end of the decade.”

Vedomosti sent a request toGazprom”, “Rusgazdobycha” and “Rushimalliance”.

Two large LNG plants are currently operating in Russia: “Sakhalin-2» Gazprom and Yamal LNG Novatek. According to GIIGNL, Russia exported 29.6 million tons of LNG in 2021, ranking 4th after Australia (78.5 million tons), Qatar (77 million tons) and the United States (67 million tons). In general, the share of the Russian Federation in 2021 accounted for a little less than 8% of global exports of liquefied gas.

The main buyers of gas from Yamal LNG, according to GIIGNL, in 2021 were the French TotalEnergies (4 million tons), the Chinese CNPC (3 million tons) and the former trading structure of Gazprom GM&T (2.9 million tons; in the summer of 2022 withdrew from Gazprom and came under the control of the German government). Also, 2.5 million tons annually are bought byNovatekand the Spanish Naturgy Energy Group. In 2021, all LNG volumes were contracted with Arctic LNG 2, while most of them – 11.2 million tons per year – were taken by myself “Novatek”, follows from the company’s report.

At Sakhalin-2 in 2021, according to GIIGNL, 9.2 million tons (12.7 billion cubic meters) of LNG were contracted, of which about 5 million tons (6.9 billion cubic meters, or about 60%) are acquired by Japanese companies.

According to Alexander Frolov, deputy director of the National Energy Institute, an almost twofold increase in global LNG production by 2030 is unlikely. So far, there are no projects planned for implementation that would provide such a sharp increase, he explains.

The expert notes that InfoTEK’s forecast of the growth in demand for LNG in the EU is most likely based on the indicators of last year and the first half of 2022. But over 8 months of 2022, the UK and EU countries reduced gas consumption by almost 10%, therefore a repetition of last year’s result on LNG imports “is not worth expecting,” he believes.

Frolov adds that the EU does not seek to enter into long-term contracts, so the supply of liquefied gas to Europe is possible only at high gas prices in this market, when it becomes more profitable for suppliers than the Asia-Pacific market.

In 2021, a sharp increase in world gas prices began. In Europe, in autumn, spot prices reached $2,000 per 1,000 cubic meters. m, but remained lower than in Asia. Since the beginning of 2022, the European “premium” to the price of gas (the excess of prices in Europe over quotations in the Asia-Pacific region) has become a frequent occurrence.

And after the start of the NWO in Ukraine and the decrease in gas supplies from Russia, spot fuel prices in the EU reached $3,900 per 1,000 cubic meters. m, but in the summer they stabilized around $2000. According to Vedomosti, based on TTF data and the Platts index, in early September, the European “premium” is about $450-500 per 1,000 cubic meters. m. According to the ICE exchange, on September 8, on the most liquid European hub TTF, October futures cost $2,123 per 1,000 cubic meters. m.

In the US, gas prices are much lower. As the Financial Times reported on September 8, citing data from the US Energy Information Administration, wholesale gas prices in the US market will remain at $ 9 per million BTU (British Thermal Units) until the end of the year. According to Vedomosti, this is $321 per 1,000 cubic meters. m. According to the publication, this could lead to an increase in LNG exports to the EU and a shortage of gas in the US domestic market.

“The EU is entering the stage of a protracted economic crisis, so the decline in demand for gas is likely to continue,” Frolov states. He adds that rising demand for gas in the Americas could lead to projects in the US being redirected to the domestic market.

Frolov agrees with InfoTEK’s conclusions that the timing of the launch of Russian LNG projects may be shifted. “The project in Ust-Luga (Baltic LNG) will have to change the technological base, as Linde leaves the Russian market. Postponing the launch of Arctic LNG 2 is also possible,” he notes, adding that a significant shift in the timing should not be expected.

The most likely now can be considered the commissioning of projects developed by Novatek in Yamal and Gydan, adds a senior analyst Alfa bank Nikita Blokhin. According to the company, it is likely that by 2027 the Arctic LNG-2 project under construction will supply about 20 million tons of LNG per year. Blokhin noted that Yamal LNG is already operating with an excess of design capacity by almost 15%. In 2021, this plant produced 19.6 million tons.

According to the expert, by 2027, Novatek alone will produce more than 40 million tons of LNG per year, and taking into account the optimization of production at the upgraded Sakhalin-2 project, in the second half of the decade in Russia, more than 55 million tons per year.

Blokhin notes that the global LNG market is waiting for global changes that involve large-scale restructuring and transformation. This is due to the fact that for the first time in the history of observations, Europe has “captured the palm” from the Asia-Pacific countries in terms of pricing and competition for free LNG shipments on the spot market,” he explained. In addition, in his opinion, recent events may push buyers and suppliers to return to the oil price peg in new long-term LNG contracts and decouple them from spot gas quotations.