LNG price recovery spurs investment in race against carbon targets | Reuters

LNG price recovery spurs investment in race against carbon targets | Reuters

The investment outlook for liquefied natural gas (LNG) has improved this year but project go-aheads will not match the bonanza of 2019, as the fight against climate change clouds the prospects for gas demand growth longer term.

Renewed optimism as the industry emerges from the pandemic, rapidly rebounding oil and gas prices and a better economic outlook is building confidence in short and long term LNG demand in Asia and spurring companies to look at new LNG projects, most of which were shelved last year when prices slumped.

However they need to take into account the ever tighter carbon emissions targets that governments are setting for 2030 and beyond.

For oil and gas producers, LNG is seen as the best option for helping their customers cut carbon emissions, especially in the Asia Pacific, where it can replace coal as a fuel, at least until clean hydrogen becomes affordable.

Global LNG demand is expected to grow by 53% to 560 million tonnes per annum (mtpa) between 2020 and 2030, consultancy Wood Mackenzie said.

To help meet that demand, Qatar Petroleum earlier this year gave the go-ahead for the world’s biggest LNG project, a 32 mtpa expansion of its North Field LNG, while Gazprom started construction of the 13 mtpa Baltic LNG project in Russia.

“Robust demand growth notwithstanding, the addition of significant new Qatari and Russian capacity means that LNG developers are now racing to get their projects through an increasingly narrow proverbial door within this decade,” WoodMac vice president Valery Chow said.