Investment for LNG infrastructure to surge in 2024

According to Rystad Energy research, investments in new liquified natural gas (LNG) infrastructure are set to increase, reaching $42 billion annually in 2024.

New LNG projects are driven mainly by a short-term increase in natural gas demand in Europe and Asia.

These greenfield investments are 200 times the amount in 2020 when just $2 billion was invested in LNG developments due to the pandemic. However, project approvals after 2024 are forecast to fall off a cliff as governments transition away from fossil fuels and accelerate investments in low-carbon energy infrastructure.

The new LNG projects are driven mainly by a short-term increase in natural gas demand in Europe and Asia due to Russia’s war in Ukraine and ensuing sanctions and restrictions placed on Russian gas exports. Spending on greenfield LNG projects this year and next will stay relatively flat, with $28 billion approved in 2021 and $27 billion in 2022. Investments sanctioned in 2023 will show a modest increase, nearing $32 billion, before peaking at $42 billion in 2024. After this date, investments will decline and drop back near 2020 levels to reach $2.3 billion in 2029. Despite an expected jump in 2030 when project announcements are forecast to total nearly $20 billion, investment in greenfield LNG is unlikely to ever return to 2024 levels as countries scale up investments in low-carbon technologies.

Natural gas is a core component of many countries’ power generation systems and, although there is a determination to reduce fossil fuel dependency and transition to a low-carbon power mix, demand for LNG is set to grow over the short term. Global gas demand is expected to surge 12.5% between now and 2030, from about 4 trillion cubic meters (Tcm) to around 4.5 Tcm. Gas demand in the Americas will remain relatively flat up to 2030. In contrast, on the back of strong economic growth and pro-gas policies from governments, regional demand in Asia and the Pacific will soar, growing 30% from about 900 billion cubic meters (Bcm) to around 1.16 Tcm by 2030. The Americas – primarily the US – will account for 30% of cumulative gas demand by 2030, while Asia-Pacific will account for 25%.

Helped by this new infrastructure, total LNG supply is expected to almost double in the coming years, growing from around 380 million tonnes per annum (Mtpa) in 2021 to about 636 Mtpa in 2030, with several major LNG projects already underway or in the pipeline. LNG production is predicted to peak at 705 Mtpa in 2034.

The U.S. is set to solidify its place as a top LNG exporter as increased domestic supply and higher prices in Europe and Asia encourage operators to sell gas overseas. The $10 billion Golden Pass LNG project in Texas, a joint venture between QatarEnergy (70%) and ExxonMobil (30%), is expected to start production by 2024, adding export capabilities to the Sabine Pass LNG terminal totaling around 18 Mtpa. Venture Global’s Plaquemines LNG in Louisiana – a $13.2 billion development sanctioned earlier this year – is expected to produce about 24 Mtpa and start up in 2025. In a move that may become more common in the crowded market, Cheniere Energy signed a deal with Chinese state giant PetroChina to supply around 1.8 Mtpa of LNG from its Corpus Christi LNG facility, with deliveries from 2026 to 2050.