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Around 35% of new LNG supply capacity is under current construction

Oil&Gas Materials 5 September 2019 11:46 (UTC +04:00)

Baku, Azerbaijan, Sept.5

By Leman Zeynalova – Trend:

Liquefied natural gas (LNG) demand is expected to grow 3.6 percent per annum to 2035, with market rebalancing expected in 2027–28, Trend reports with reference to McKinsey & Company.

McKinsey & Company is the trusted advisor and counselor to many of the world's most influential businesses and institutions.

The Global Gas and LNG outlook to 2035 shows that approximately 35 percent of new LNG supply capacity is under current construction, with expectation to come online in phases until 2025.

The company expects that meeting additional LNG demand after 2017-2028 will require more than $400 billion of investment across the LNG value chain.

Liquefaction projects will require more than $250 billion of investment in the next 15 years, with most of the investments expected in Africa, the Middle East and North America, according to McKinsey & Company.

“We expect LNG demand to outpace overall gas demand as Asian markets rely on more distant supplies, Europe increases its gas-import dependence, and US producers seek overseas markets for their gas (both pipe and LNG). China will be a major driver of LNG-demand growth, as its domestic supply and pipeline flows will be insufficient to meet rising demand. Similarly, Bangladesh, Pakistan, and South Asia will rely on LNG to meet growing demand to replace declining domestic supplies. We also expect Europe to increase LNG imports to help offset declining domestic supply,” reads the report.

Demand growth by the middle of next decade should balance the excess LNG capacity in the current market and planned capacity additions, the company believes.

“We expect that further capacity growth of around 250 billion cubic meters will be necessary to meet demand to 2035. With growing shale-gas production in the United States, the country is in position to join Australia and Qatar as a top global LNG exporter. A number of competing US projects represent the long-run marginal LNG-supply capacity.”

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Follow the author on Twitter:@Lyaman_Zeyn

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