As the global energy crisis deepens and countries struggle to secure reliable energy sources, investment in new liquefied natural gas (LNG) infrastructure is expected to grow, reaching $42 billion annually in 2024, research by Rystad Energy shows.
The indicated greenfield investments are 20 times the amount in 2020, when only $2 billion was invested in LNG due to the pandemic.
At the same time, project approvals after 2024 are predicted to be on the hook as governments divest from fossil fuels and accelerate investment in low-carbon energy infrastructure.
New LNG projects are driven mainly by a short-term increase in demand for natural gas in Europe and Asia due to Russia’s war in Ukraine and subsequent sanctions and restrictions on Russian gas exports. Greenfield LNG project spending this year and next will remain relatively flat, with $28 billion approved in 2021 and $27 billion in 2022, Rystad said.
Investments approved in 2023 will increase but “modestly” to close to $32 billion before peaking at $42 billion in 2024, analysts said.
After that, investment is expected to decline and will decline near 2020 levels to reach $2.3 billion in 2029. Despite an expected spike in 2030, when project announcements are forecast to reach nearly At $20 billion, greenfield LNG investment is unlikely to ever return to 2024 levels, experts also believe. They explain this with the countries’ ambition to increase investment in low-carbon technologies.
Global gas demand is expected to grow by 12.5% by 2030, from about 4 trillion cubic meters (Tcm) to about 4.5 Tcm. Gas demand in the Americas will remain relatively stable through 2030.
In contrast, amid strong economic growth and pro-gas policies by governments, regional demand in Asia and the Pacific will jump, increasing by 30% from about 900 billion cubic meters (Bcm) to about 1.16 Tcm by 2030 Americas – primarily the US will underpin 30% of cumulative gas demand by 2030, and the Asia-Pacific region 25%.
According to Rystad analysts, the new infrastructure will help LNG supply so that it is expected to almost double in the coming years, rising from around 380 million tonnes per annum (Mtpa) in 2021 to around 636 Mtpa in 2030, as several major LNG projects are already underway or in the pipeline.