The ongoing war in Ukraine has precipitated a global energy crisis that is expected to boil over to 2023 and probably 2024. At the same time, the call for governments around the world to do away with fossil fuels for a net-zero greenhouse gas future is getting louder by the day. Renewable energy sources such as wind, hydro, and solar aren’t reliable enough to power our industries, transportation, and homes. Until there is sufficient technology to back the production of enough reliable renewable energy, the world will have to keep relying on fossil fuels for the global economy to stay afloat.
Luckily, liquefied natural gas (LNG) has proven to be a reliable transition fuel that can stand in for renewable energy sources for the time being. LNG is cleaner than other fossil fuels both in terms of carbon & nitrogen emission and microscopic particle pollution. Experts in the LNG sector predict that there is enough LNG to last the world another two centuries, which means we have enough time to experiment with, refine, improve, and align the renewable energy sector with the global energy consumption needs. LNG has also shown its ability to fill the gap created by the ongoing energy crisis. There are many natural gas reserves on every continent of the planet, which minimizes our dependence on Russia and other oil-rich countries.
LNG in 2023: Increasing LNG Investment
European and Asian countries will continue scrambling to enhance their LNG investments with the aim of attaining net-zero greenhouse gas emissions. A recent study by Rystad Energy shows that this scramble will precipitate a surge in LNG storage and transportation infrastructure, which is likely to hit US$42bn annually between now and 2024. This is a huge jump considering that LNG investments were only slightly over US$2bn during the 2020 pandemic.
The study, however, predicts a stagnation of LNG project approval after 2024. This is mainly because governments around the world are focused on accelerating investments in the low-carbon, renewable energy infrastructure. 2021 and 2022 saw a combined US$55bn of LNG projects approved. Projections are that there will be US$32bn worth of approvals in 2023 and US$42bn in 2024. That is to say, as much as LNG investments are set to stagnate after 2024, there will be enough investments to last the energy sector another 5-10 years. The stagnation is expected to last 5 years, with LNG investments surging to US$20bn in 2030. LNG will remain core to power generation around the world through this stagnation.
Growing LNG infrastructure
2023 will see the launching and commissioning of multi-million dollar LNG infrastructure projects around the world. Among the most notable ones:
- Russia’s Arctic LNG 2, which is projected to produce almost 20 million tons of LNG per year. The project will become fully operational in 2023. The plant will employ sophisticated liquefaction technology that will make LNG liquefaction, storage, and shipping more efficient.
- India’s Jafrabad FSRU. The FSRU (floating storage and re-gasification unit) will boost the country’s LNG capacity by up to 12%. It will process and ship an additional 47.5 million tons of LNG annually.
- Qatar’s North Field Expansion LNG Project. This project started in 2021 and is set to become the world’s largest LNG project in the Middle East when it becomes operational in 2025. Qatar will also leapfrog other Asian countries to become the largest LNG exporter in the Asian market, producing in excess of 110 million tons of LNG per year.
- USA’s Rio Grande LNG plant. Based in Brownsville, Texas, the plant will pump an extra 27 million tons of LNG annually into the North American energy market. The project will start operating fully in 2023.
- AG&P’s first LNG import facility in India. Under the leadership of Joseph Sigelman, AG&P will be launching the facility in India’s Karaikal port which is located in the southern city of Puducherry. The facility is expected to supply Puducherry and its environs with over one million tons of LNG per annum. AG&P is also on the verge of opening another import terminal in the Philippines that will be operational within the first quarter of 2023.
- Germany’s Brunsbüttel LNG terminal. This terminal will move Germany one step closer to becoming self-reliant in its domestic natural gas consumption. The terminal is expected to supply Germany with an additional 5.1 million tons of LNG annually.
Bottom line:
There’s a handful of LNG projects going on around the world in 2022 that will become operational in 2023. The impact of that will be more self-reliance for countries that have largely relied on Russia to fuel their energy sector. LNG is doing well as a transitional fuel, now and in the foreseeable future. The world is well on course for a low-carbon renewable future.
