Tight LNG supplies to continue through 2025: IEEFA

Global Liquefied Natural Gas (LNG) supplies are expected to remain tight through 2025, which is likely to curb the demand growth in Asian markets, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

However, European LNG demand may remain strong in the short term, but will decline by 2030 as decarbonisation and energy security policies take effect, said the latest Global LNG Outlook, IEEFA.

The report analyses the LNG supply and demand developments in Europe, Asia, Australia, the US, and Qatar.

The study said that the market turmoil of 2022, characterised by record high prices and unreliable supplies, has undermined long-term LNG demand growth in both Europe and Asia.

Last year, India, Bangladesh, and Pakistan reduced their LNG demand by a combined 16% due to concerns over fuel security, unaffordability, and dwindling foreign currency reserves.

The countries may have to meet their Liquefied Natural Gas (LNG) demand from volatile spot markets till the near future as existing contractors are unable to increase supplies in the short term, the report noted.

Mentioning that the countries are actively seeking new long-term LNG supply contracts from diverse suppliers, it said long-term LNG supply contracts with shipments beginning before 2026 are limited globally.

As per the report, European countries boosted LNG imports by 60% to make up for declining pipeline gas shipments from Russia.

China cut 2022 LNG purchases by 20%, due to a combination of high prices, COVID-19 shutdowns, and slower economic growth.

Meanwhile, in Japan and South Korea, high LNG prices accelerated a resurgence of nuclear power generation that could slash power sector gas demand, finds the study.