IEA Expecting LNG Supply Glut Beyond 2030

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)

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Summary
Liquefied natural gas (supplies are expected to increase exponentially to 2030, the International Energy Agency said. But beyond that, supply-side pressures could deter investments. The amount of new liquefied natural gas (LNG) available globally is expected to swell considerably by the end of the decade, but the resultant glut could deter investments, the International Energy Agency said.

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A Lot More LNG Capacity is Coming

The Paris-based International Energy Agency (IEA) in a global report on liquefied natural gas (LNG) said it expects about 1 trillion cubic feet in global annual capacity will be added by the end of the decade, supported in large part by the United States and Qatar.

Of those, the United States is the world leader in both natural gas production and exports of LNG. IIR Energy Monday reported that feed gas sent to functional terminals set a new record at 17.4 billion cubic feet per day (Bcf/d) during the weekend. That's roughly 1.4 Bcf/d above federal estimates for the annual average.

Qatar, meanwhile, is aiming to increase its LNG export capacity substantially by the end of the decade. Based on studies from Rice University's Baker Institute for Public Policy, the Middle East nation is planning to boost export capacity from 77 million metric tons per annum (MTPA) to 142 MTPA by 2030.

Both countries are filling a void in the European market left by ever-tightening sanctions on energy-rich Russia. Combined, both countries will account for about 70% of the new capacity coming online by the end of the decade, the IEA said.

Of those, the U.S. is the clear leader, with an estimated 2.8 trillion cubic feet of annual liquefaction capacity approved year-to-date.

"The amount of LNG projects reaching final investment decisions highlights the industry's confidence that demand for LNG will continue to expand strongly, reflecting the supportive policy environment in the United States for natural gas projects," according to the IEA report.

Future U.S. LNG Projects

President Donald Trump's administration has signed off on a handful of LNG facilities since January. Despite that, however, not every project will make it to the finish line. Securing deals with Japanese energy companies already, an LNG facility slated for Alaska needs an 800-mile pipeline, and shovels have yet to hit the ground.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here the Alaska LNG project reports.

But while the sector is in ascendance now, the IEA sees market pressure ahead stemming from the anticipated over-supply situation.

"A prolonged period of lower LNG prices could reduce the incentive for project developers to invest in LNG liquefaction projects and in upstream and midstream infrastructure," its report read.

In the U.S. market, total natural gas production is on pace for annual growth of around 0.3% to average 181 Bcf/d next year. Year-on-year growth from 2024 should show a 4.4% increase. LNG deliveries, meanwhile, are expected to increase by 6.6% next year, potentially putting a strain on domestic supplies.

Consumption levels in the U.S. market remain strong, with residential, industrial and power-sector demand all above year-ago levels. With data centers added to the mix, the domestic U.S. market looks tight.

"The energy demand from AI [artificial intelligence]-driven data centers is placing enormous pressure on the power sector," a report Tuesday from investment firm ING read. "Natural gas and coal, in the short term, would play a stronger role in providing an adequate supply, but these two sources alone would not be sufficient."

But the IEA added that, beyond 2030, global LNG demand won't absorb all the new supplies coming online.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).