IGU report highlights evolving role of LNG

The IGU's 15^th annual World LNG Report highlights the evolving role of LNG and its crucial role for the energy transition and energy security

LNG has become a critical component of the global energy mix, with its role as a flexible, highly efficient, and reliable resource continuing to grow. Several proposed projects are undertaking innovative emissions-reducing measures to decarbonise the LNG value chain by integrating renewable electricity, carbon capture and storage, partnering to develop e-methane, and grow bio-LNG, or liquefied biomethane, which is produced from capturing and upgrading biogas that would have otherwise been emitted from landfills, agricultural waste, or other feedstock.

Global LNG trade grew by 2.1% in 2023, according to the report, to more than 401 million tonnes (MT), After two years of severe instability, the LNG market reached a fragile equilibrium, given lack of spare supply in the near-term.

Supply constrained

Supply remained constrained, with just 0.8% YOY growth from Indonesia's 3.8 MTPA addition at Tangguh LNG. However, global liquefaction capacity is likely to grow to over 700 MTPA by 2030, driven by new FIDs and the start-up of projects currently under construction to support growing demand, particularly in the growing Asian markets, where environmental considerations have led to a focus on coal to gas switching.

The USA became the largest producer and exporter (84.53 MT in 2023 vs 75.63 MT in 2022), followed by Australia (79.56 MT), Qatar (78.22 MT), and Russia (31.36). 

China was the largest LNG importer at 71.19 MT, followed by Japan, Korea and India, with more demand responding to the lower spot price. Europe remained the second-largest importing region at 121.29 MT in 2023. With LNG supplying almost half of Europe's gas, the competition between Asian and European markets remains a key market dynamic.

The global LNG market continues to rapidly evolve as it responds to growing gas demand in emerging markets, the increasing number and diversification of market participants, and the acceleration of technology development and innovation.

However, several major uncertainties may have an impact on the market, such as the Biden Administration non-FTA LNG project approvals pause, which could delay over 70 MTPA of new capacity; sanctions on Russian LNG, which impact almost 20 MTPA of expected capacity; the possibility that Ukraine may not extend the Russian gas transit deal at the end of 2024; shipyard bottlenecks; the ongoing security risk in the Middle East; as well as some declining gas field supply. More than 120 MTPA of currently operational liquefaction capacity is over 20 years old, and some of these facilities are being mothballed due to insufficient upstream gas production, creating supply side risk.

IGU president, Li Yalan commented, “The LNG industry has demonstrated incredible agility and innovation through some of the toughest tests over the recent years, and this is an industry that continues to play a pivotal role to navigate through an energy crisis that has not yet been fully resolved and an energy transition that has been challenged.

“As the world moves toward a low emissions future, nations are seeking ways to achieve their climate commitments while keeping energy affordable, available, and secure. LNG is a tool that will be critical to providing greater resiliency for rapidly changing energy systems around the world, and it will have an essential role mitigating the inherent risk of uncertainty through that process.”