The global market for liquefied natural gas (LNG) could face instability in the near future due to the introduction of several new export terminals. This could also lead to a decline in gas prices globally, as the new projects face competition from cheaper renewable energy and a revival of nuclear power. By 2030, it is estimated that LNG supplies will increase by 67%, or 636 million tonnes per annum (mtpa), from 2021 levels, flooding the global market with excess capacity.
Cheniere Energy CEO Jack Fusco has cautioned that there is now a trillion dollars’ worth of natural gas infrastructure being built worldwide, indicating a long-term shift in the use of natural gas. Qatar and the United States are expected to lead the way in new LNG production, adding 49 mtpa and 125 mtpa (16.4 billion cubic feet per day) of capacity, respectively, by 2027.
Despite rising demand in Europe leading to a surge in LNG prices last year, the market is now under pressure from customers looking for cheaper and more sustainable alternatives. The popularity of wind and solar power is increasing, with their market share jumping to over 10% in 2021, up from just 1% the previous year. Additionally, nuclear power is expected to make a comeback in countries such as Japan and France, with the latter planning to build six new reactors before 2035.
As the LNG market becomes oversaturated, there is uncertainty around demand beyond 2027, and the potential damage caused by high prices on future demand. S&P Global’s Michael Stoppard emphasized this point, stating that it is the industry’s most significant unknown factor in discussions about global gas strategy.