Current global LNG prices are volatile. This is according to TotalEnergies Chief Executive Officer, Patrick Pouyanne.
Reuters reports that during an interview broadcast on Tuesday, November 14, at the ongoing Wood Mackenzie’s Gas and LNG Future of Energy Conference in London, he highlighted that the liquefied natural gas (LNG) market is likely to stay unpredictable until fresh supply becomes accessible. He also pointed out that current prices, compared to those in 2022, are relatively reasonable.
Analyzing the volatility in the LNG market as a supply issue, he said:
- “Prices are volatile because we have very little margin between the supply and demand system. From 2026, to 2027 we will have more margin to read the price.”
He also mentioned that TotalEnergies oversees 50 million tons, exceeding 10% of the global LNG market.
Additionally, he emphasized the significance of the U.S. market within their portfolio, enabling them to transport shipments between Europe and Asia.
The International Gas Union Context
The IGU’s World LNG report, released in July 2023, highlighted that in 2022, Asian markets led by China and LNG aggregators were the primary buyers, while US exporters dominated sales.
These aggregators play a crucial role by amassing diverse LNG portfolios, aiding project development and boosting future demand by increasing supply availability.
This becomes pivotal in opening new markets for LNG imports that might not be prepared for long-term gas commitments. Additionally, the report underscored Europe’s significance as a major buyer, halting Russian gas supplies due to the Russia-Ukraine conflict.
The Bloomberg Context
In September 2023, Bloomberg noted that in winter, China is expected to drive the growth in LNG demand by around 12%, matching the rising need for gas. Bloomberg also predicted that the transport industry will experience the quickest surge, thanks to more budget-friendly LNG prices, making natural gas-fueled vehicles more economically appealing.
Additionally, lower prices might enhance the appeal of gas-powered electricity generation, potentially boosting demand.
However, despite this, the increase in LNG imports might be restrained due to more affordable local gas production and pipeline imports.
The Nigeria LNG Market Context
The International Gas Union’s Global Gas Report in October 2023 pointed out that Nigeria, Qatar, and Russia are expected to become major suppliers of liquefied natural gas (LNG) to Europe. The report also highlighted a significant rise in Europe’s LNG imports, jumping from 74 million tons in 2021 to 124 million tons in 2022—an impressive 68% increase.
Meanwhile, the Nigeria Liquefied Natural Gas (NLNG) Limited has recently stated that its Bonny plant is still under a force majeure after a year (since October 2022) due to a drop in feed gas due to attacks on gas pipelines and reduced output from aging wells in the country.
