The deficit in the LNG market will remain until the middle of the decade

Alexey Belogoryev, Deputy Director on Energy Studies at the Institute for Energy and Finance, assessed the situation on the LNG market for the next decade in an interview with the internet portal Economics Today.

The situation on the LNG market will remain stable until 2025, Aleksey Belogoriev said in a conversation with the Economics Today. After that, new production capacities will come into operation, and the market will move from a state of moderate deficit to a confident surplus.

The LNG market has not changed

Kpler published data on the LNG market for 2021: Australia became the leader, surpassing Qatar in total exports.

Australia produced 80.23 million tons of LNG (77.63 million tons in 2020), Qatar came in second with a result of 77.83 million tons (77.88 million tons in 2020), and the United States came in third, which strengthened their positions in the market - 70.43 million tons instead of 47.35 million tons a year earlier.

These three countries supplied 60% of LNG supply to the world market. The strengthening of the US position is due to the fact that several new lines were opened in the country, and gas prices accelerated in the world.

As for Russia, LNG exports are limited to the project of Yamal LNG (Novatek) and Sakhalin-2 (Gazprom), new liquefied gas capacities will be put into operation in only in the middle of the decade.

“Each country has its own specifics: if we talk about Qatar, then this country introduced the last facilities in 2011. Because of this, the volume of Qatari exports is at the same point,” Belogoryev states.

In February 2021, Doha adopted an ambitious program to commission new facilities in 2026-2027 with a production volume of 30 million tons per year. Until that happens, Qatari LNG production will remain at current levels.

“The Australians have almost reached the nominal peak in LNG production, and they have no plans to introduce new capacities. Australia's future plans are in doubt, primarily because of climate policy," Belogoryev sums up.

“American LNG producers have big plans to increase production. But will they be justified? It all depends on the price in the world market. If the quotes remain high in the long term, then we can expect a further boom not even in the construction of new capacities, but in terms of gas production in the United States, here the Americans have potential,” the expert states.

“If we take the global economy as a whole, then until the turn of 2025-2026 there will be no serious commissioning of new production capacities in the world. Some volumes will be added, but in insignificant quantities,” Belogoryev concludes.

The situation will be tense until 2025

“After 2025, the situation will change, there will be a sharp increase in LNG production - a huge number of capacities will be commissioned in different countries, including the Russian Federation, which will cause an oversupply on the world market. The situation remains volatile, much will depend on the nuances, and everything will continue to change in the coming years,” Belogoryev states.