New Delhi: The ongoing war in Ukraine will propagate a structural shift in the global LNG market leading to unprecedented demand for LNG according to the latest Refinitiv LNG Market Outlook 2030.
With previously dominant Russian piped gas supply to Europe having been decimated, LNG has emerged as the only meaningful alternative – stripping supply from competing markets. LNG imports for 2022, in Northwest Europe, amounted to 90 bcm, up 93% from 2021 (46.5 bcm).
“When looking at total Europe, LNG imports for 2022 reached 168 bcm, an increase of 58% on 2021 (106.5 bcm). Meanwhile, Russian pipeline exports to Europe, via the three main lines: Nord Stream, Velke Kapusany and Malnow, amounted to 103.5 bcm in 2021 and fell to 41.8 bcm in 2022, down 40%,” Refinitiv said in a statement.
Simultaneously, the infrastructure required to store and import LNG, known as Floating Storage and Regasification Units (FSRUs), has seen huge competition with the winners being able to fast-track new and increased import capacities.
Most of the FSRUs that have been earmarked for Europe have been redeployed from other locations or from other FSRUs that were sailing as conventional tankers with FSRUs in the Netherlands and Finland redeployed from Kuwait and Argentina respectively with a total of 22 expected to be in service by the end of 2024 up from 7 at the beginning of 2022.
Overall demand is pushing up global LNG spot prices and driving demand destruction among several price-sensitive importers, even halting the import ambitions of new markets that saw LNG as a cleaner and cheaper alternative.
The fierce competition for uncommitted cargoes will result in sustained elevated global LNG price levels before a new super-cycle, an extended period of market boom or tightness, of LNG supply kicks in post-2025.
On supply, based on projects already sanctioned, annual average supply growth of 5.3% is expected for 2023-30.
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