Europe emerges as key growth target for LNG suppliers
Baku, Azerbaijan, Sept.13
By Leman Zeynalova – Trend:
Europe has emerged as key growth target for suppliers of liquefied natural gas (LNG), said an analysis by the global natural resources consultancy Wood Mackenzie.
“Just 18 months ago the LNG market was depressed, anticipating an extended period of oversupply. Things haven’t played out quite like that, and prices have staged a strong recovery. Delayed production startup at some new LNG projects has also diminished the feared oversupply,” said the analysis.
Future gas supply in Europe will be structurally reduced by the decline of Groningen, Wood Mackenzie believes.
“The Dutch field, a pillar of continental supply for over 50 years, is beset by earthquakes. Volumes will be cut to minimal levels in the early 2020s and cease in 2030. With Russian pipelines maxed out, even with modest demand growth Europe has emerged as a key growth target for LNG suppliers. The loss of Groningen alone accounts for half of the 20 mmtpa increase in our forecast 2025 supply gap,” said the analysis.
The market may not be out of the woods yet, as supply builds up next year potentially putting some downward pressure on prices, according to Wood Mackenzie.
“But the outlook beyond is bullish, with 65 mmtpa of new supply needed to meet growing demand by 2025 – that's 20 mmtpa more than we forecast a year ago.”
Wood Mackenzie points out that gas is presently winning market share from coal.
“But intensifying policy on energy efficiency, methane and carbon emissions, the growth of renewables, development of battery storage and new energy technologies all pose a threat. Gas cannot rest on its laurels as a bridging fuel for the energy transition. The industry needs to keep pressing the case for gas as the low carbon intensity option, and continue to build new markets by ensuring security of supply at a competitive cost.”
Follow the author on Twitter: @Lyaman_Zeyn