Published on September 14th, 2018 | by Joshua S Hill0
Asia To Drive Natural Gas Growth Over Long Term, According To BNEF
September 14th, 2018 by Joshua S Hill
Asia is set to drive the long-term growth of liquefied natural gas, better known as LNG, in the coming decade, according to new figures from Bloomberg New Energy Finance, which is also predicting 2018 will set a new record for LNG imports.
Bloomberg New Energy Finance (BNEF) published its latest LNG forecast this week, Global LNG Outlook 2018, which predicts that LNG demand will be 308 million metric tons per annum (MMTPA) this year, up from 284 MMTPA in 2017, growth of 8.5%, before slipping back in 2019 and 2020, before picking up again in 2021.
The expected growth in 2018 is expected to come primarily from China, with the remainder being focused in Japan, South Korea, and India, prefacing what BNEF expects to be regional dominance in the coming decade.
“The region will add a total of 143MMtpa in 2017-30, accounting for 86% of the world’s total LNG demand growth in the period,” said Maggie Kuang, head of Asia Pacific LNG analysis and lead author of the report.
Regional demand growth will be dominated by Asia, both in the short-term — in which China and emerging markets in South Asia are expected to boost global LNG trade in 2019 by 12 MMtpa — and then post-2021, after Japan restarts its ninth nuclear plant and the Russian gas pipeline starts to begin supplying China.
It’s worth noting that nuclear energy is losing its grip on the Japanese market as it recovers from the 2011 Fukushima Daiichi nuclear disaster of 2011. Since then, all of Tokyo Electric Power Company’s (better known as TEPCO) nuclear reactors have remained offline, and in July the company announced its intention to shift away from nuclear towards renewable energy, specifically offshore wind. I asked BNEF’s Singapore-based head of Asia Pacific LNG analysis, Maggie Kuang, whether she thought it was possible Japan’s growing concern over nuclear might prevent the restart of its ninth nuclear plant, as BNEF had predicted.
“It is a really good question,” Kuang replied. “It’s for sure that there has been a growing concern towards nuclear energy in the country since the Fukushima accident in 2011.
“The nuclear reactors we expect to restart in 2019-2020 have passed the stringent safety review and are currently waiting for the construction of safety measurements to finish. The probability of restart is very high technically. So far, the current local governor is supportive to the restart. There will be a gubernatorial election in Fukui prefecture, the host of 13 commercial nuclear reactors, in April 2019. We will closely monitor the space.”
Japan aside, BNEF nevertheless believes that any global supply surplus post-2019 will be modest and brief. “Average utilization of export plants in 2020-21, when post-FID supply capacity peaks, will likely be 87%, which would be the lowest in the past decade, but that only suggests a modest surplus,” explained Ashish Sethia, global head of LNG analysis. “Post-2021, growth will rebound with South and Southeast Asia becoming the main growth engine due to faster depletion of local gas and significant infrastructure build-out.”
European LNG demand (including Turkey) will drop to 60 MMtpa by 2030: “Growth of renewables and batteries will marginalize gas-fired generation in the European power system,” said John Twomey, head of European gas analysis. “This will restrict the growth of LNG imports, despite declines in Dutch and Norwegian gas production. Europe will limit its reliance on Russian pipeline gas imports.”
Bloomberg expects there to be 104 MMtpa worth of new LNG capacity added between 2018 through to 2021, with global post-final investment decision (FID) capacity to peak at 392 MMtpa in 2021 which should provide sufficient supply to meet demand through to 2025.