LNG market remains tense: Delays derail plans

This year's summer months brought Europe hope that the upcoming winter might be the last difficult one in securing natural gas. It was anticipated that liquefied natural gas (LNG) would become a buyer's market by the middle of next year. However, various project delays and unexpectedly high demand in Asia are shifting these expectations. Consequently, the LNG market could remain tight until mid-2026, and only in 2027 might an excess of new supply ease prices. LNG offers the strategic advantage of being tradable worldwide. This flexibility allows Europe to pivot away from traditional pipeline suppliers like Russia, Norway, Algeria, and Libya, and tap into new sources in the USA, Qatar, and Australia. Yet, the multibillion-dollar LNG liquefaction facilities, even for leading companies like Exxon Mobil, Shell, and QatarEnergy, are prone to delays and cost overruns. In recent years, however, LNG has taken center stage when Russia, Europe's largest gas supplier, invaded Ukraine, forcing Europe to seek alternatives. After a price surge to over 50 US dollars per million British Thermal Units (Btu) in 2022, prices have now dropped but remain significantly above pre-war levels. Buyers had hoped for further price decreases next year, but delays at major projects like Golden Pass LNG in Texas and Corpus Christi 3 tell a different story. Even smaller projects, like Energia Costa Azul in Mexico, are facing delays. Another example is Plaquemines LNG by Venture Global LNG, which is likely to hit the market only by 2024. The balance of market power has thus temporarily shifted in favor of sellers. In the long term, the USA and Qatar promise substantial expansions of their LNG production, which could quickly shift market power to buyers. However, this scenario is not realistic before 2027—a harsh winter awaits Europe.