The main risk for the LNG market

Marcel Salikhov, Director of the Center for Economic Expertise, National Research University Higher School of Economics, commented to REGNUM on the statement of the Russian Deputy Prime Minister Alexander Novak that the world market of liquefied natural gas (LNG) could more than double by 2050.

“The outlook for 2050 looks rather distant, but it essentially includes one investment cycle in the oil and gas industry. Most likely, the LNG market will double much earlier than 2050 - even before 2035, Salikhov said. - The main risk is overproduction and price declines. In the next 5-10 years, the supply of LNG will increase dramatically. The question arises, will there be enough demand, and at what prices will demand and supply be balanced? For producers, the risk is that the market will face overproduction and this will lead to lower prices, which will negatively affect the financial performance of LNG projects. "

In addition, he drew attention to the fact that in recent years, world LNG trade has grown by 8-10%, while pipeline gas trade between the countries - by 2-3%.

“In the future, we can also expect that LNG trade will continue to grow at a faster pace. LNG provides more flexibility for sellers and buyers, and also makes possible a greater transport leverage compared to pipeline supplies,” concluded the expert.