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LNG demand to grow further amid current geopolitical situation

Oil&Gas Materials 6 July 2022 13:31 (UTC +04:00)
LNG demand to grow further amid current geopolitical situation
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, July 6. LNG demand is expected to grow further in 2022 as the ongoing Russia-Ukraine conflict continues to impact global gas supply, reinforcing LNG’s critical role in global energy security, Trend reports with reference to the International Gas Union (IGU).

In 2021, Russia contributed to 8 percent of global LNG exports, out of which, 43.9 percent were to Europe, while the remaining 56.1 percent were to Asia Pacific and Asia. With the European Union committing to eliminate Russia energy imports by 2027, growth in existing LNG exporting markets, such as the United States and Qatar, and developing new ones like growing Africa, are important avenues to diversify its energy sources and support European energy security,” reads the latest IGU report.

As of April 2022, 136.2 MTPA of liquefaction capacity was under construction or approved for development, but only 7.7 MTPA of that overall capacity increase is expected to come online in the second half of 2022, with the rest gradually coming in between 2023 and 2027.

“In 2021, we witnessed one of the highest volumes of capacity being approved in a single year, with 50.0 MTPA worth of liquefaction capacity reaching a final investment decision (FID). This was mainly contributed by the QatarGas North Field East (NFE) project, which added 32.0 MTPA to global approved liquefaction capacity. The remaining approved capacity was contributed by the Baltic LNG T1– T2 (13.0 MTPA) and Pluto T2 Expansion (5.0 MTPA).

The current geopolitical situation has re-invigorated appetite for new liquefaction project development, with several project developers hoping to leverage strong demand and high LNG prices to progress to an FID. However, challenges such as access to financing remain, as financial institutions are reducing their exposure to fossil fuel investments, focusing developments on clean energy instead. As such, it is crucial for new liquefaction plants to be increasingly innovative in a decarbonising landscape, leveraging on solutions to continue driving down emissions in the liquefaction process and the rest of the LNG value chain. It is also important to have clarity and consistency in the policy environment, which impacts financial risk and liquidity provision.”

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