After Russia’s attack on Ukraine, many countries stopped supplying Russian gas via pipelines and switched to supplies of raw material from other sources, mainly liquefied natural gas delivered by sea. But a wave of new LNG deliveries from projects agreed years ago in anticipation of growing demand are being continually postponed, Bloomberg reports.
The delays, which affect all suppliers from the US to Mozambique, do not indicate any imminent delay improvement for high prices on the LNG marketand this despite investments worth over USD 200 billion, which were to result in an oversupply of LNG already in 2025.
The LNG market may go into oversupply in 2027, says BNEF. Meanwhile, demand exceeds supply / Bloomberg
Reasons for delays
One of the reasons for the delays is prolonged construction of natural gas liquefaction projects in Texas and Mexico. Another reason for reducing supply is Western sanctions stopping the Russian Arctic LNG 2 installation.
At the same time global demand is growing. Moreover, new buyers are entering the fight for the raw material. Even Egypt is becoming a net importer this year after failing to overcome production problems and an exceptionally hot summer boosted summer demand, notes Bloomberg.
Florence Schmit, energy strategist at Raboban, predicts that next year’s consumption will likely be higher than in 2024.partly due to the gradual switch to gas in the energy and transport sectors in Asia. In her opinion, increasing supply in the second half of 2025 may come too late to keep up with the increased demand.
Correction of LNG production forecasts
Bloomberg reports that the International Energy Agency lowered its forecast for LNG production growth in 2025 in an update published last week. IEA estimates show that global production will increase to almost 580 billion cubic meters in 2025, marking a downward revision compared to the previous forecast of over 600 billion cubic meters.
Data from the research company Wood Mackenzie seem to confirm the IEA’s predictions that the supply of LNG will be lower than previously expected. Wood Mackenzie lowered its estimates of additional supply by approximately 16 percent. compared to calculations made six months ago.
LNG price under pressure
In recent years, Europe has experienced two exceptionally mild winters. However, lower temperatures expected this season in some areas may increase competition from Asian countries, which will certainly affect the price.
While the current cost of gas has fallen significantly since 2022 highs, benchmark futures in Europe are still around twice as expensive as they were before the crisis.
Increased dependence on LNG is partly to blame for high liquefied natural gas prices. Europe now competes with buyers from all over the world, and fuel goes to the highest bidder.
Artificial intelligence will drive demand
Demand for LNG is expected to increase significantly by the end of the decade as the artificial intelligence boom increases demand for energy-intensive data centers. McKinsey & Co. predicts that withthe demand for artificial intelligence will constitute 5%. energy demand in Europe by 2030
Meanwhile, BlackRock predicts that Over the next 10 years, energy consumption in the Asia-Pacific region will increase by approximately 50%. According to Bloomberg Intelligence, gas demand in the energy sector USA may increase by up to 30%. by 2030 compared to current levels.
