According to the International Energy Agency, a strong increase in production of liquefied natural gas will push prices down, but there is also a risk of a supply glut.
In its latest World Energy Outlook report, the Paris-based agency said that an “unprecedented surge” in LNG projects, which would come online from 2025, would likely add over 250 billion cubic metres per year of new capacity by 2030.
The new supply equals about 45% of today’s total global LNG supply, the IEA said.
The agency forecasts a nearly 80% drop in LNG prices to $6.9 per million British thermal units (mmbtu) in 2030 from $32.3 per mmbtu in 2022 – a year of record-high prices.
The IEA said that while some of the LNG had been contracted on a longer-term basis, over one-third of the new gas would be sold on the short-term market.
Several major energy companies such as Shell, Eni and TotalEnergies have already inked 27-year LNG supply agreements with Qatar.
“However, mature markets – notably in Europe – are moving into stronger structural decline and emerging markets may lack the infrastructure to absorb much larger volumes if gas demand in China slows,” the International Energy Agency said in its latest report.