Huge volumes of new LNG supply are coming to market this decade, but none of the huge export capacities currently under construction will be able to alleviate the tight European gas market in 2023 or 2024. The United States and Qatar, the world’s largest LNG exporters, will have plenty of new capacity after 2025, mitigating a potential supply shortfall, but with a new wave of gas deliveries to Europe for next winter or the winter after. Won’t be able to help.
Reduced demand at higher prices could reduce LNG consumption in both Europe and Asia in the near term. But even in a weak demand scenario, Europe will need enough LNG to replace all the Russian gas lost after the end of this winter and to build up enough stocks for the winter of 2023/2024.
The problem is that large-scale LNG supplies will not arrive from the US or Qatar until 2025. That leaves at least two more years of a very tight global LNG market, in which Europe will struggle to do as much non-Russian imports as possible. . gas. The high prices can stay here for at least another two years.
Meanwhile, Europe is making good progress in setting up Floating Storage Gasification Units (FSRUs) to import more LNG, and developers are using more Floating LNG Platforms (FLNG) to export the fuel. But those floating facilities have little capacity compared to the huge onshore terminals that the largest LNG exporters are currently building.
Massive U.S. LNG Projects Coming Online…after 2024
Three projects are currently under construction in the United States – Golden Pass LNG, Plaquemines LNG and Corpus Christi Stage III.
The EIA said in September that, once completed, these projects would expand U.S. peak LNG export capacity by a combined 5.7 billion cubic feet per day (bcf/d). to Europe, will have a peak export capacity of about 20 bcf/d by 2025, compared to about 14 bcf/d today. The US currently exports about 11 bcf/d, while Freeport LNG has been out of service since June.
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Venture Global’s $13.2 billion Plaquemines LNG reached final investment decision in May and was the first project to reach financial status since Venture Global’s Calcecu Pass facility in August 2019. Venture Global has 20 years of sales and procurement experience. Agreement for 80% of the completed 20.0 MTPA project.
QatarEnergy and ExxonMobil, the developers of Golden Pass LNG in Sabine Pass, Texas, said last month that the new LNG export facility was on track for a 2024 start-up. The companies announced they have agreed to sell the LNG produced in their joint venture market independently. ExxonMobil will have exclusive rights to market 30% of Golden Pass LNG volumes, while Qatar Energy Trading will market the remaining 70%.
Cheniere Energy, the largest U.S. LNG exporter, made an FID in June for the Corpus Christi Stage 3 project, which is expected to “deliver much-needed volume to the global LNG market by the end of 2025,” said Jack. Fusco, President of Cheniere. and CEO. .
Other projects may also receive positive FIDs in the coming months given higher export prices and the expectation of continued demand for LNG in Europe, which aims to surpass Russian gas by 2027.
The LNG supply race could lead to a second wave of US LNG projects, but it will take time to develop new supplies, said Katarina Filippenko, chief analyst for global gas supplies at Wood Mackenzie earlier this year.
But most of this new LNG supply, including that from projects that took FIDs in previous years, is not likely to come until after 2026.
“By 2026, Europe will have to compete with Asia for marginal LNG molecules to meet demand – just as it is now,” said Filippenko.
“Competition between Europe and Asia for limited LNG will intensify until a new wave of supply arrives after 2026. Until then, prices will inevitably remain high.”
The largest LNG expansion project in the world in Qatar will not be completed until 2026
In Qatar, the largest LNG expansion project in the world is expected to start production as early as the fourth quarter of 2025.
According to top importer Japan, global long-term LNG contracts until 2026 will be sold out by then.
London-based consultancy Timra Energy said in an analysis last week that the response to global LNG supply is weak in the near term, but that record prices are driving investment in new supply projects.
According to analysts, “the challenge is that the average lead time of a project is about 5 years.”
New supply next year and into 2024 is very limited, reflecting FID’s lag in the low price environment at the end of the last decade, as well as general headwinds for capex investment in fossil fuel projects.
Limited new liquefaction capacity until 2025 supports a continuation of the current regime of higher and more volatile prices over the next 2 to 3 years, combined with explosive growth in European demand.
Projects in the US and Qatar will significantly increase new supply in 2025-2026. However, the dynamics of the LNG market from 2025 will strongly depend on how global LNG demand develops during this period, the consultant noted.
By Tsvetana Paraskova for Oilprice.com
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