Major Uncertainties for Supply-Constrained LNG Market: IGU World LNG Report

The global LNG market faces several major uncertainties in the supply-constrained market including Russian sanctions, Middle East security risk and aging plants, according to the International Gas Union World LNG Report cited by Bloomberg.

• The European switch to become more reliant on LNG combined with increasing demand in Asia has left the market more susceptible to supply disruptions. LNG has become critical as a flexible, highly efficient, and reliable resource in the global energy mix.
• Sanctions on Russian impact both the new Arctic LNG-2 project and “even currently operational projects may have issues producing spare parts of maintenance,” the report said. The recent EU ban on transshipments of Russian LNG cargoes is adding to the complexities.
• Global liquefaction capacity is likely to grow to over 700mtpa by 2030. The Biden administration pause on new export licences could however delay more than 70m tons of new US LNG capacity, but global balances currently remain unaffected.
• Other risks include production bottlenecks at shipyards and more frequent shut-ins with about a quarter of global operational capacity more than 20 year old, equating to more than 120mtpa. “Younger facilities also face this risk if upstream production declines faster than expected, such as in Egypt.”