BNEF sees global LNG demand growing to 305MMtpa in 2018 and 490MMtpa by 2030. New export capacity scheduled to come online in 2018-2020 will provide sufficient supply until 2025.
London, New York and Singapore, 22 March 2018 – Global imports of liquefied natural gas (LNG) will set a new record this year on the back of 7.2% growth, according to new research published today. A further surge in demand to 2030 will be driven by environmental measures in China, rising power generation in South and Southeast Asia, and a reduction in domestic gas production in Europe.
Global LNG Outlook 2018, the latest forecast from Bloomberg New Energy Finance (BNEF), shows that LNG demand will reach 305MMtpa this year, up from 285MMtpa in 2017. Although this represents a strong expansion, it will be down from the 9.6% rate seen between 2016 and 2017.
BNEF sees a slowing in the rate of LNG demand growth during 2019-22, with demand stabilizing in the 314-330MMtpa range, before a new acceleration during the 2020s. From 2023, imports will rise at a compound annual growth rate of 5% till 2030.
Ashish Sethia, global head of LNG analysis, said: “The growth rate in 2019-22 will slow as the commissioning of new gas pipelines from Russia absorbs some of China’s demand, and as more nuclear power comes online in Japan. Average utilization of export plants in 2021, when supply capacity reaches its peak, will likely be 81%, which is low by historical standards.”
The report highlights that floating storage and regasification (FSRU) technology will continue to unlock demand in new markets, particularly South and Southeast Asia. “In 2022-23, South and Southeast Asia will become the main driver for the world’s LNG imports, adding 11.7-13.6MMtpa of demand,” commented Maggie Kuang, head of Asia-Pacific LNG analysis and lead author of the report.
“During 2018-30, European LNG imports are anticipated to grow faster than previously expected due to restrictions on production at the giant Groningen gas field in the Netherlands,” stated John Twomey, head of European gas analysis. “In the long term, declines in Dutch and Norwegian gas production and retirement of coal capacity will push LNG imports over 104MMtpa by 2030, as Europe aims to keep its reliance on Russian pipeline gas under control,” he added.
On the supply side, 30-33MMtpa of new capacity will be added around the world during 2018-20. Global capacity is forecast to peak at 396MMtpa in 2021 and will provide sufficient supply to markets until 2025.
Figure 1: Global LNG demand forecast
Source: Bloomberg New Energy Finance, Poten & Partners, Customs. Note: Net imports. South Asia includes Pakistan, Bangladesh and Sri Lanka. Southeast Asia includes Thailand, Singapore, Malaysia, Indonesia, Philippines, Vietnam and Myanmar.
The growth of demand in Asia and the continual push to reduce the cost of U.S. LNG will likely lead to new sales and purchase agreements for the U.S. product. “About 65MMtpa of supply projects, mostly in the Gulf of Mexico, are likely to reach final investment decision between 2018 and 2020,” said Anastacia Dialynas, lead LNG analyst, Americas.
Figure 2: Global LNG demand/supply-capacity balance
Only 20MMtpa of new contracts were signed in 2017, some 10MMtpa lower than the previous year, reflecting an expectation among buyers of abundant supply over the coming few years. However, we expect a revival in contract signing activities in 2020. Continuous demand growth will result in the need for new contracts growing from 13MMtpa in 2022 to 297MMtpa by 2030 (assuming the demand is fully met with term contracts). New contracts are also needed to underpin final investment decisions on new supply projects by 2020, to provide sufficient supply capacity in the market post-2025.
High-level findings of the Global LNG Outlook 2018 are available in a free public report.
Bloomberg New Energy Finance
 MMtpa = million metric tons per annum