Major liquefied natural gas (LNG) producers are advancing with new projects to meet the growing global power demand, driven by urbanization and technological advancements. They are optimistic that these factors will offset challenges such as potential oversupply, increasing project costs, and tariff uncertainties. LNG is increasingly recognized as a transition fuel on the journey to achieving net-zero emissions. In light of Russia’s invasion of Ukraine and the subsequent spike in gas prices, governments around the globe are prioritizing energy security.
Tengku Muhammad Taufik, CEO of Malaysian state energy firm Petronas, highlighted the intense demand for LNG in Asia-Pacific economies, attributing part of this to the rise of data centers supporting artificial intelligence. He pointed out that power grid outages have emphasized the necessity for reliable baseload power from conventional energy sources. Industry forecasts reflect this growing demand. Woodside projects a 50% increase in LNG demand by 2030, while Shell anticipates a 60% rise, reaching 630-718 million metric tons annually by 2040.
To cater to this demand, new LNG supplies will largely originate from North American projects, including Plaquemines LNG and LNG Canada, which is set to dispatch its first cargo soon. Companies like TotalEnergies, Woodside Energy, Commonwealth LNG, and Mexico Pacific LNG are also pursuing new projects. However, concerns about escalating costs have made producers cautious regarding market prospects. TotalEnergies is looking to reduce capital expenses at its Papua New Guinea project, while Woodside Energy is contemplating selling further stakes in its Louisiana LNG project.
Moreover, industry leaders warn that an influx of new projects could lead to oversupply, potentially lowering prices. With Cheniere Energy predicting that global liquefaction capacity could increase significantly by 2030, maintaining competitive pricing in markets, particularly in South and Southeast Asia, is crucial in order to prevent a shift to coal dependency.