This analysis of LNG demand for the period 2015-2035 was recently undertaken by MJMEnergy as part of its in-depth analysis of LNG supplies 2015 to 2035 published in the MJMEnergy LNG Supply Handbook 2015-2035 . This particular article focuses on the world’s continuing thirst for energy and the role of LNG in supplying that need.
World energy demand 2015-2035
In keeping with all long-term gas demand forecasts the
starting point is an understanding of world energy demand
which is expected to continue rising, driven by a number
of factors, including population growth, increased standards
of living and general economic growth.
Figure 1 - An overview of various forecasts of world energy demand 2015-2035 
Figure 1 provides a comparison of long-term energy demand forecasts by the EIA, ExxonMobil and BP, the overall trend for growth continues with the majority of energy demand scenarios forecasting energy demand in 2035 within the range 17,500-20,650mtoe (million tonnes of oil equivalent). In particular the IEA’s flagship New Policies scenario forecasts that global energy demand will rise from 14,000mtoe to around 18,300mtoe in 2040, some 1,700mtoe less than its Current Policies scenario, which is its forecast for energy demand if current policies were to remain unchanged for the next 20 years. Power generation and industry are likely to see the largest growth, with more modest growth expected from transport. Growth rates of power and industry in developed economies such as those in North America or Europe are likely to be modest compared to the fast growing developing economies.
World gas demand outlook 2015-2035
In parallel with the rise in world energy demand, world gas
demand has grown steadily to nearly 3.5tcm by 2014, accounting
for approximately 25% of the world’s of total energy consumption
with most gas being consumed in power generation, industry and
Figure 2 - World gas demand by region 1965-2014
World gas demand forecast is expected to continue to grow over the next twenty years and is expected to be in the region of 4.5-5.3tcm by 2035. Whilst oil is likely to remain the number one fuel of choice, despite the recent rise of coal in some markets, gas is still expected to draw level or even overtake coal as the world’s number two supplier of energy.
Figure 3 - A selection of world gas demand forecasts for the period 2015-2035
World LNG Demand 2015-2035
Against this background of growing world energy and gas demand, the
supply of LNG has increased over the last 50 years to an estimated
333bcm (242mt) in 2014, accounting for 33% of gas internationally
traded and around 10% of total gas consumption. By 2035 LNG demand
is forecast to be in the region of 516bcm-940bcm (374-681mt).
Figure 4 - Range of LNG demand forecasts 2015-2035
Many commentators and analysts would argue that LNG demand is always certain since it is the planned output of existing and future planned LNG liquefaction plants. However, as the wide range of LNG demand forecasts indicates, LNG demand is uncertain, the question is why?
There are a number of reasons why we are seeing a wide range of LNG demand forecasts including the following:
- Gas demand is uncertain - With the exception of the IEA 450 Scenario the range of world gas demand forecasts vary by around 450bcm, which alone is large enough to create uncertainty.
- The interaction with pipeline gas and prices - Particularly in Europe, we see the European gas market acting as a sink for LNG suppliers switching between pipeline gas and LNG supplies when price and contractual sensitivity allows.
- The impact of environmental policies - There is considerable uncertainty regarding the impact of various environmental policies on gas and LNG demand. For example, tighter regulations on hydraulic fracturing ("fracking") may reduce shale gas supplies in North America and/or prevent their exploitation elsewhere. Gas-fired power generation may be seen as a clean alternative to coal or a dirty obstacle to renewables (and in some cases nuclear power). Natural gas vehicles provide opportunities for gas and LNG demand growth, but face competition from alternative electric, hydrogen, and, in marine applications, low-sulphur diesel fuel sources. Heat networks, heat pumps, and biomass provide alternatives in gas' traditional space-heating markets, but the levels of financial support required are uncertain.
Against this backdrop of uncertain demand, an unprecedented volume of LNG production capacity is under construction and planned (if all announced plants were built capacity could exceed 1800bcm/year (1300mtpa) by 2035). LNG developers have committed billions of dollars of capital investment in new plant, with LNG supply in MJMEnergy’s Global Mid Case forecast to double to over 700bcm (over 500mt) by 2025. A key question for the industry is how much demand will be available to absorb this supply, and what price the LNG market will need to settle at to displace pipeline gas volumes. The boom years for LNG producers may be over.
- LNG Supply Handbook 2015-2035
- A number of the forecasts used actually go to 2040 but for the purposes of simplicity we have truncated the graph at 2035.
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