A New Global Gas Order? (Part 1): The Outlook to 2030 after the Energy Crisis

The energy crisis, catalysed by the Russian invasion of Ukraine, has disrupted the global gas market. This analysis out to 2030 assesses the impact of the crisis and considers whether this may lead to a fundamental change in the global gas market or whether it my just be a slight blip in the otherwise continued growth in gas demand and supply. In particular, will the very high gas prices in 2022 lead to a world by 2030 where gas could start losing out to coal and renewables in the energy transition? The detailed review of expected gas demand by the OIES to 2030, suggests that, in comparison to the pre-Russian invasion of Ukraine outlook, some gas demand has been permanently lost but only of the order of 5 to 6%. This is not all due to the energy crisis but in the USA also the potential impact of the Inflation Reduction Act. Global gas demand is projected to grow by 10 percent between 2021 and 2030, with the Middle East and China leading the way and generally in the power and industry sectors. The rapid growth in LNG export capacity from the middle of this decade is expected to ease the tightness of the gas market and fully replace the loss of Russian pipeline gas to Europe, helped by lower gas demand. A glut of LNG supply is possible by the end of the decade with prices falling back to $8 per MMBtu or less if we see short run pricing dynamics taking over as they did in 2019 and 2020. A number of uncertainties remain, notably the growth in gas demand in China, Europe and the ASEAN countries, but lower prices, in a supply glut may stimulate more gas demand in price sensitive sectors and regions.