Large volumes of new LNG supplies are coming to market this decade, but none of the huge export capacities currently under construction will arrive in time to ease Europe’s tight gas market, either in 2023 or 2024. The United States and Qatar, the world’s main LNG exporters, will have plenty of new capacity after 2025, easing the potential supply shortage, but unable to help Europe with a new wave of gas supply, which either for next winter or the winter after. .
The destruction of demand in a context of high prices could reduce LNG consumption in the short term in Europe and Asia. But even in a lower demand scenario, Europe will need a lot of LNG to replace all the Russian gas it will have lost after the end of this winter and to build up adequate stocks before the winter of 2023/2024.
The problem is that there is not much large-scale LNG supply from the United States or Qatar until 2025. That leaves at least two years of a very tight global LNG market, during which Europe will struggle to import more and more non-Russian products. gas. High prices could be here to stay, at least for two more years.
In the meantime, Europe is doing good progress in setting up floating regasification storage units (FSRUs) to import more LNG, and developers are using more floating LNG platforms (FLNGs) to export the fuel. But these floating facilities have lower capacities than the huge onshore terminals currently being built by major LNG exporters.
Massive LNG projects in the United States will come online… after 2024
In the United States, three projects – Golden Pass LNG, Plaquemines LNG and Corpus Christi Stage III – are currently under construction.
When completed, these projects will increase the U.S.’s peak LNG export capacity by 5.7 billion cubic feet per day (Bcf/d) by 2025, according to the EIA said in September. Thus, the maximum export capacity of what is today the world’s largest exporter sending around 70% of its LNG to Europe would reach almost 20 Bcf/d by 2025, compared to around 14 Bcf/d currently. . The United States currently exports about 11 billion cubic feet per day, with Freeport LNG having been out of service since June.
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Venture Global’s $13.2 billion Plaquemines LNG achieved final investment decision in May, and was the first U.S.-based project to reach financial close since Venture Global’s Calcasieu Pass installation in August 2019. Venture Global has already put in place sales and 20-year purchase term for 80% of the 20.0 MTPA Project.
QatarEnergy and ExxonMobil, developers of Golden Pass LNG in Sabine Pass, Texas, said last month that the new LNG export facility was on track for start-up in 2024. The companies announcement they had agreed to independently market the LNG produced in their joint venture. ExxonMobil will have exclusive rights to market 30% of Golden Pass LNG volumes, while QatarEnergy Trading will market the remaining 70%.
Cheniere Energy, the leading US LNG exporter, achieved in June an FID for the Corpus Christi Stage 3 project, which is expected to “deliver much-needed volumes to the global LNG market by the end of 2025,” Cheniere President and CEO Jack Fusco said.
Other projects could also receive a positive FID in the coming months, given high export prices and expectations of continued LNG demand in Europe, which is looking to phase out Russian gas by 2027.
The race for LNG supply could lead to a second wave of LNG projects in the United States, but new supply will take time to develop, Kateryna Filippenko, principal analyst, global gas supply, at Wood Mackenzie, said earlier this year.
But much of this new LNG supply, including projects that have taken IDF in previous years, is not expected to come until after 2026.
Until around 2026, “Europe will have to compete with Asia for the fringe molecule of LNG to meet demand – just as it is now,” Filippenko noted.
“Competition between Europe and Asia for limited LNG will be intense until a new wave of supply arrives after 2026. Prices will inevitably remain high until then.”
World’s largest LNG expansion project in Qatar won’t be ready until 2026
In Qatar, the the largest LNG expansion in the world project is not expected to start production until the fourth quarter of 2025.
By then, long-term global LNG contracts before 2026 are exhaustedaccording to the main Japanese importer.
Near-term global LNG supply reaction is weak, but record prices are triggering investment in new supply projects, London-based consultancy Timera Energy said in a statement. analysis Last week.
“The challenge is that the average timeline for completion of projects is around 5 years,” according to analysts.
New supply next year and into 2024 is very limited, reflecting the pause in FIDs at the end of the last decade in a low price environment as well as general headwinds for capex investments in fossil fuel projects.
“The limited new liquefaction capacity through 2025, combined with a jump in European demand, supports the continuation of the current regime of higher and more volatile prices over the next 2-3 years,” Timera Energy said.
The American and Qatari projects will bring a substantial increase in new supply in 2025-2026. However, LNG market dynamics from 2025 will strongly depend on how global LNG demand develops in the meantime, the consultancy noted.
By Tsvetana Paraskova for Oilprice.com
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