Global markets to spend $1 trillion on LNG projects in next decade

A wave of new LNG export projects is expected to be commissioned within a decade, with the US and Qatar responsible for half of the projects already under construction.

According to data compiled from the LNG 2023 report of the San Francisco-based think tank Global Energy Monitor (GEM), LNG export and import projects worldwide, with a total annual capacity of 917 million tons and 705 million tons, respectively, are underway with an investment of about $1 trillion.

Currently, export projects with a total capacity of 192.7 million tons per annum are under construction, and LNG projects that will provide a total import capacity of 203 million tons per annum are under construction.

The rest of the planned LNG projects are in pre-construction stages of development.

Asia and Europe are currently the major developers of new LNG import projects, hosting around 90% of all new capacity under development.

However, LNG demand in Europe may be short-lived as the continent pursues its decarbonization agenda, and the price sensitivity of many Asian importers may call into question forecasts for LNG demand growth.

According to the report, the $118 billion worth of export projects currently under construction could fail to recover their initial investments while operating if governments meet their climate targets.

With last year’s energy security crisis due to the Russia-Ukraine War and the EU’s pledge to reduce Russian gas imports, GEM’s report maintained that European countries rushed to scoop up LNG from the spot market and proposed a slate of new LNG import projects, while the ensuing global gas crunch lent new momentum to massive, proposed export terminals in the US.

The report said that the effects of these shifting global dynamics this year began to materialize when seven LNG terminals began operating in Europe, increasing the region’s import capacity by nearly one-fifth. In addition, three US export projects, equivalent to roughly half the country’s existing export capacity, reached final investment decisions.

The expected capital investment for import projects is $190 billion, whereas $878 billion is estimated for export projects.

– US takes the lead

The US leads in the countries building new export terminals, with exports of 336.9 million tons of LNG annually, followed by Russia at 164.1 million tons, Canada with 75.6 million tons, Mexico with 69.3 million tons, and Qatar with 49 million tons.

Asia dominates new import capacity, with the most capacity under development on an annual basis at 454 million tons. Europe follows with 183 million tons, China with 267.9 million tons, India with 75.2 million tons and Germany with 65.4 million tons.

Commenting on the report to the AA, GEM Research Analyst Robert Rozansky summarized the risks of new LNG investments, saying, ‘Last year’s global gas crisis showed that LNG is an unreliable and volatile resource and imposes huge costs on countries that rely on LNG for energy. Meanwhile, solar and wind power have already overtaken gas-fired energy in many parts of the world, and renewables are expected to get cheaper over time.’

Nevertheless, he stressed that LNG holds a larger share in the global gas trade than piped gas, with international reports confirming that the share of LNG in the gas trade rose to 51% in 2022 relative to 46% the prior year.

• Global Energy Monitor (GEM)
• LNG export