The International Gas Union’s (IGU) World LNG Report 2024 reveals that global trade in liquefied natural gas (LNG) grew by 2.1% in 2023, exceeding 401 million tonnes (MT). This global market currently connects 20 exporting markets to 51 importing markets, while supply is currently the main factor limiting growth.
The IGU’s 15th annual report emphasises that after two years of severe turbulence, the LNG market has found a new but fragile equilibrium, given the lack of available supply in the short term.
“LNG has become a critical component of the global energy mix, with its role as a flexible, highly efficient and reliable resource continuing to grow. Decarbonisation of the LNG value chain is therefore a priority for many industry stakeholders.” IGU adds that the growth in LNG receiving capacity has shaped the development of the market over the last 24 months, reaching an impressive 1,029.9 MTPA in 47 markets by the end of February 2024, adding almost 70 MTPA in 2023 and making it the year with the highest number of new additions since 2010. Europe had the largest addition of 30 MTPA, followed by Asia with 26.9 MTPA and Asia-Pacific with 13 MTPA. The Philippines and Vietnam joined the club of LNG importers for the first time in 2023.
Supply remained limited, with growth of just 0.8 per cent year on year with the addition of 3.8 MTPA from Indonesia at Tangguh LNG. However, global liquefaction capacity is expected to grow to more than 700 MTPA by 2030, driven by new FIDs and the start-up of projects currently under construction to support rising demand, particularly in growing Asian markets where switching from coal to gas is an important decarbonisation and air quality improvement strategy.
LNG exports were dominated by the USA, which became the largest producer and exporter (84.53 Mt in 2023 compared to 75.63 Mt in 2022), followed by Australia (79.56 Mt), Qatar (78.22 Mt) and Russia (31.36 Mt).
The IGU study finds that in 2023, spot LNG prices fell to levels palatable to the recovery of import growth in Asia, with Platts JKM averaging $13.86/mmBtu during the year, while average annual price volatility was significantly reduced from 2022 levels, but still remains above the pre-crisis period.
China once again became the largest LNG importer with 71.19 Mt, Japan and Korea remained in second and third place despite annual declines, and India returned to fourth position, with higher demand responding to the lower spot price.
Europe also consolidated its role as a major LNG importer, maintaining the second largest regional import volume with 121.29 MT in 2023. With LNG supplying almost half of Europe’s gas, competition between the Asian and European markets remains a key market dynamic.
The IGU indicates that the global LNG market continues to evolve rapidly in response to the growing demand for gas in emerging markets, the increase and diversification of market participants and the acceleration of technological development and innovation.
“The LNG industry is no longer a game just for large markets or large companies, with portfolio players playing an increasingly important role, by 2023, around 180 companies were involved in LNG deliveries under long-term contracts.”
However, the study warns that several major uncertainties confront the supply-constrained market, contributing to the fragility of its current balance.
The main sources of this uncertainty include: the pause in approvals of non-FTA LNG projects by the Biden administration, which could delay more than 70 MTPA of new capacity; sanctions on Russian LNG, which impact almost 20 MTPA of expected capacity; the possibility that Ukraine will not renew the Russian gas transit agreement at the end of 2024; bottlenecks at shipyards; the continuing security risk in the Middle East; as well as declining supply from some gas fields.
More than 120 MTPA of currently operational liquefaction capacity is more than 20 years old, and some of these facilities are being decommissioned due to insufficient upstream gas production, which draws attention to the supply-side risk.
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