Report: LNG Market Equilibrium Fragile Due to Supply Issues
(P&GJ) — The global LNG market remains tight despite lower prices and a 2.1% growth in 2023, reaching over 401 million tonnes, according to the International Gas Union's (IGU) 2024 World LNG Report. The report highlights that while the LNG market has found a fragile equilibrium, supply constraints are a significant challenge.
LNG has solidified its role in the global energy mix as a flexible and reliable resource. Decarbonizing the LNG value chain is a priority, with several projects integrating renewable electricity, carbon capture, and developing bio-LNG from biogas.
LNG receiving capacity has grown significantly, reaching 1,029.9 million tonnes per annum (MTPA) across 47 markets by February 2024. Europe saw the greatest addition with 30 MTPA, followed by Asia and Asia Pacific. The Philippines and Vietnam became LNG importers for the first time in 2023.
Supply growth was minimal, with just a 0.8% increase due to Indonesia's addition at Tangguh LNG. However, global liquefaction capacity is expected to exceed 700 MTPA by 2030, driven by new projects and growing demand in Asia.
The U.S. led LNG exports in 2023, followed by Australia, Qatar, and Russia. Spot LNG prices declined, making imports more affordable, particularly in Asia. China was the largest LNG importer, with Japan, Korea, and India following.
The global LNG market is rapidly evolving, driven by increasing demand in emerging markets and technological advancements. About 180 companies were involved in LNG deliveries under term contracts in 2023, with 35% of transactions being spot-priced.
However, the market faces uncertainties, including potential delays in US non-FTA LNG project approvals, sanctions on Russian LNG, the end of Ukraine's Russian gas transit deal, shipyard bottlenecks, Middle East security risks, and declining gas field supply. Over 120 MTPA of operational liquefaction capacity is over 20 years old, with some facilities being mothballed due to insufficient upstream gas production, highlighting the need to address supply-side risks.
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