Gas to grow, prices to cool: five takeaways from the IEA’s Medium-Term Gas Report

As Europe fires up for winter, the IEA’s latest gas outlook delivers a dose of realism — LNG waves, lower prices, and the race to stay flexible. Greg Molnar provides this 5 key takeaways from the report.

(1) Just ride the wave: global LNG liquefaction capacity is set to expand by 300 bcm/y by 2030, with Qatar and the US accounting for about 70% of incremental capacity.

This would translate into a net LNG supply growth of 250 bcm, when accounting for ramp-up rates, utilisation factors and declines from legacy producers.

And while 250 bcm is almost half of the current LNG trade, this is just around 7% of Asia’s thermal coal demand;

(2) Gas the price: this unprecedented expansion in global LNG supply could put downward pressure on LNG import prices. price could eventually start to converge towards the range of the short-run marginal cost of US LNG starting from 2027.

In this case, LNG import prices could be about 40% lower during 2025-30 than in the previous 5 years;

(3) Gas to grow: global gas demand is expected to expand by 9-10% by 2030, with Asia alone accounting for around half of demand growth.

In the base case, global gas consumption grows at nearly 1.5% per year, but when lower prices are considered, the demand response could lift the average growth rate to 1.7% -a clear acceleration compared to the previous 5 years (1.45%);

(4) Let me flex: LNG suppliers will need to adapt their marketing strategies to ensure that the LNG wave has long lastings benefits for the global gas market.

This includes more flexible delivery terms, greater pricing diversity, enhanced short-term trading capabilities, as well as greater downstream integration.

The latter would be particularly important in new, emerging markets which require additional investments into natural gas infrastructure;

(5) The neighbours gas is always greener: low-emissions gases are set to increase by more than two and half times by 2030, with growth largely supported by booming biomethane and hydrogen.

Despite this strong growth, their combined share in global gas supply remains at just around 1%.

+(1) No place for complacency: the LNG wave and potential lower prices should not be a distraction.

A lack of investments in the second half of the decade could tighten market conditions through the 2030s, especially is demand response is stronger than expected.

What is your view? how will gas markets evolve over the medium-term?

Source: Greg MOLNAR