Securing flexible LNG supply chains amid rising global demand

As global energy demand continues to rise sharply, the need for secure and flexible LNG supply chains has become increasingly urgent. According to Wood Mackenzie, approximately 135 million metric tonnes per annum (mmtpa) of new LNG capacity will be required by 2040 to meet future consumption needs.

However, several LNG export projects that have already reached Final Investment Decision (FID) are facing delays, threatening to reduce the volume of LNG entering the market. This is creating greater market uncertainty and accelerating a structural shift in global LNG flexibility.

Matt Schatzman, Chairman and CEO of NextDecade, noted: “Having a little more supply is always better than having too little. We need to start thinking about collaboration and managing the supply chain.”

Delays and disruptions

The issue of undersupply is pressing. CEO of MidOcean Energy De la Rey Venter gave an overview of the bottlenecks at the root of the problem: “A toxic mix of three issues: regulatory instability and lack of regulatory clarity – and the US is, of course, the best example of that; fiscal uncertainty in many countries; and market uncertainty, where Europe always stands out. Plus the fact that financing projects isn't becoming easier.”

Schatzman added: “The overlap between the LNG business and the power industry – and the current timeline required to obtain some of this equipment, which is competing with massive power projects – is a bottleneck.”

This view was shared by Martin Hupka, President for the LNG business line at Sempra Infrastructure, who added: “It is different than 10 years ago when we were launching projects. You have to put much more money at risk, which means you need to be very confident in your project – and in your off-takers.”

Overcoming barriers for as sustainable LNG future

Schatzman highlighted how perspectives have shifted: “Three years ago, it was all about whether gas demand was going to continue to grow because of the proliferation of renewables. Now we're talking about an LNG supply crunch. Natural gas is experiencing a renaissance. We need it. It's part of a total solution. Three years ago, the focus was all on carbon intensity. Now, we're concentrating on security of supply.”

Accelerating supply growth is a central issue for Nigeria. Olalekan Ogunleye, Executive Vice president of gas, power & new energy at NNPC Limited stated: “Everybody understands that a resource-rich country like Nigeria has to be in the race to optimise gas development. Our focus is a product that is affordable across all layers of society, not just for the middle class. The trick is about finding the right balance.”

Hamed Al Naamany, CEO of Oman LNG underscored the importance of a diversified approach to energy technology, as well as the ability to scale up small-scale energy solutions. “In Oman, we look a little inward before we look outward. We are balancing renewables to offset gas for power. We must push for discussions around manufacturing, renewable integration to unlock alternatives, and new technologies to produce energy that would ease the burden on plant construction.”

Ensuring political stability

Yuya Hasegawa, Director of Energy Resources Development Division at Japan’s Ministry of Economy, Trade and Industry noted: “The mission of a country is to protect its citizens - we must secure energy regardless of geopolitical challenges. In that context, governments must provide a more stable policy environment to maintain a consistent energy supply.”

From the energy supplier point of view, Al Naamany added: “Energy security relies heavily on geopolitics, it’s important that everyone plays their part in ensuring the uninterrupted flow of energy.”

Ogunleye shared his perspective: “What we have found in Nigeria is that deepening partnerships and collaboration has added an extra dimension to ensuring and maintaining stability.” He concluded: “Replacing competition with partnership contributes to stability in gas supply.”