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LNG Investments to Peak at $42 Bln in 2024, Rystad Says

According to research by Rystad Energy, global LNG investments will peak at $42 billion in 2024, a 50 per cent jump from current spending.

As the global energy crisis deepens , investments in new LNG infrastructure are set to surge, reaching $42 billion annually in 2024, Rystad Energy research shows.

These greenfield investments are 200 times the amount in 2020 when just $2 billion was invested in LNG developments due to the pandemic.

However, project approvals after 2024 are forecast to fall off a cliff as governments transition away from fossil fuels and accelerate investments in low-carbon energy infrastructure.

The new LNG projects are driven mainly by a short-term increase in natural gas demand in Europe and Asia due to Russia’s war in Ukraine and ensuing sanctions and restrictions placed on Russian gas exports.

Spending on greenfield LNG projects this year and next will stay relatively flat, with $28 billion approved in 2021 and $27 billion in 2022.

Investments sanctioned in 2023 will show a small increase, nearing $32 billion, before peaking at $42 billion in 2024. After this date, investments will decline and drop back near 2020 levels to reach $2.3 billion in 2029.

Despite an expected jump in 2030 when project announcements are forecast to total nearly $20 billion, investment in greenfield LNG is unlikely to ever return to 2024 levels as countries scale up investments in low-carbon technologies.

Global gas demand is expected to surge 12.5 per cent between now and 2030, from about 4 trillion cubic meters (Tcm) to around 4.5 Tcm. Gas demand in the Americas will remain relatively flat up to 2030.

In contrast, on the back of strong economic growth and pro-gas policies, regional demand in Asia and the Pacific will grow 30 per cent from about 900 billion cubic meters (Bcm) to around 1.16 Tcm by 2030.

The Americas will account for 30 per cent of cumulative gas demand by 2030, while Asia-Pacific will account for 25 per cent.

Total LNG supply is expected to almost double in the coming years, growing from around 380 million tonnes per annum (Mtpa) in 2021 to about 636 Mtpa in 2030. LNG production is predicted to peak at 705 Mtpa in 2034.

“Recent price surges in natural gas markets worldwide have somewhat constrained gas demand, triggering a resurgence of coal-fired power generation in many countries. However, governments remain bullish on gas as an affordable, transition fuel for power in the coming years as demonstrated by the rapid growth in LNG infrastructure investments,” says Palzor Shenga, vice president of analysis with Rystad Energy.

Source: Offshore Energy

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