A 3% decline in gas demand in 2020 and 1% growth in Liquified Natural Gas (LNG) caused high levels of LNG market volatility with both extreme oversupply and extreme tightness during the course of the year, making it an unprecedented year for gas and LNG markets worldwide.
According to a report released by McKinsey, gas will be the strongest-growing fossil fuel and will increase by 0.9% from 2020 to 2035. It is the only fossil fuel expected to grow beyond 2030, peaking in 2037. Meanwhile, LNG is set for stronger growth, as domestic supply in key gas markets will not be able to keep up with demand growth. Demand is expected to grow 3.4% per annum to 2035, with some 100 million metric tons of additional capacity required to meet both demand growth and decline from existing projects. LNG demand growth will slow markedly but will still grow by 0.5 percent from 2035 to 2050, with more than 200 million metric tons of new capacity required by 2050.
This strong demand for LNG has provided a boost for the US-based, leading producer of liquefied natural gas, Cheniere. GlobalData, a leading data analytics and consulting company in London, says Cheniere Energy’s Q1 earnings show promising growth in the LNG sector.
Cheniere Energy is off to a strong start in 2021 as the company had Q1 earnings of $1.54 per share and generated revenue of $3.09 billion. After four tough quarters, strong LNG demand has provided a boost for Cheniere and the company has managed to exceed expectations.
Steven Ho, Upstream Oil & Gas Analyst at GlobalData, comments: “Cheniere has been struggling to meet expectations for the past few quarters and needed the result this quarter to prove that its LNG business has long term resilience, as LNG demand is expected to continue growing through 2024.
“As the company claims, natural gas use in power generation capacity is expected to grow by an additional 300 GW by 2040, equivalent to 300 million tonnes of LNG. The majority of the demand comes from Asia, especially China, India and other Southeast Asia countries as these regions embark on major gas infrastructure expansion, further encouraged by a global effort to reduce GHG emissions and use cleaner fuels.”
With the world transitioning to a low-carbon energy future, a range of solutions across the global energy system, from electricity generation to industry and transport, need to come available to meet the rise in demand.
In efforts to support a decarbonized economy along with the energy transition movement, Cheniere and Shell announced a collaboration to deliver a carbon-neutral US LNG to Europe. The LNG cargo was supplied from the Sabine Pass Liquefaction capacity, to be delivered to Europe in early April. Cheniere Energy will then retire the portion of carbon emission by purchasing the offset from Shell’s nature-based projects, which protect and redevelop natural ecosystems to absorb more CO2 emission from the atmosphere.
“At Cheniere, we’re focused on measuring, reducing and mitigating emissions, and this first carbon-neutral cargo for Cheniere highlights our efforts to measure and mitigate emissions throughout the LNG value chain,” said Anatol Feygin, EVP and Chief Commercial Officer of Cheniere said. “We are thankful for our collaboration with Shell in this effort and for our mutually beneficial commitments to improving environmental performance and maximising the climate benefits of Cheniere’s LNG.”
Being a readily available source of gas, LNG also brings the benefits of being the cleanest-burning hydrocarbon, producing half the greenhouse gas emissions and less than one-tenth of the air pollutants of coal.
