Hydrogen

New LNG projects must come online quite quickly to prevent a supply shortage by 2030

LNG supply might fall short of need by about 150 million tonnes annually by the end of this decade without extra jobs coming online.

It’s a problem that requires to be dealt with now, says Mark Gyetvay, chief monetary officer at Russian manufacturer Novatek.

Novatek expects around the world LNG need to continue to grow even as countries decarbonise their energy systems. The concept that gas is “falling out of the formula is grossly overstated”, Gyetvay said.

He expects increased coal-to-gas switching in the power sector, hydrogen production and gas being utilized in tandem with periodic renewables for power generation to increase gas demand in the coming years.

However brand-new monetary investment choices (FID) on new tasks will require to be made to satisfy the rising demand.

While spot northeast Asian LNG rates surged previously this month, companies are not likely to make FIDs based on “inflated rates”, Gyvetvay said.

In Australia, 3 export projects are expected to reach FID this year: Santo’s (ASX: STO) Darwin LNG Barossa job, Mitsui’s Waitsia, and Woodside’s (ASX: WPL) Scarborough projects.

Overseas, Qatar has actually dedicated to the North Field growth that will add 32Mt of LNG production per year, the very first stage of expansion at the huge job while a second stage could come online in 2027.

Around 9 other LNG export tasks are targeting FID in 2021. All nine jobs look unlikely to shoot in the current environment, according to CommSec.

Santo and Woodside share rate charts


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