SINGAPORE: Demand for liquefied natural gas is expected to rise by 25 to 50 percent by 2030, making it the fastest growing hydrocarbon over the next decade, analysts from Morgan Stanley Research said in a note on Monday.
Morgan Stanley has raised its long-term LNG price outlook to $10 per million British thermal units (mmBtu), expecting spot prices of the super-chilled fuel to average 40 percent higher over the next decade, versus the past five years.
Asian spot LNG prices hit a record above $56 mmBtu earlier this month as surging demand ahead of the northern hemisphere winter spurred by an economic rebound from the pandemic outstripped supply.
Morgan Stanley said at least 73 million tons per annum (mtpa) of new projects are needed to meet LNG demand by 2030. This will require an additional $65 billion of new projects, on top of the $200 billion of projects already under construction which were sanctioned since 2019.
“Contrary to investor expectations, the world is going to need more LNG in the initial phase of the energy transition,” the analysts said.
“Competing technologies for natural gas are not being developed fast enough, and there are significant benefits in reducing coal consumption while greener fuels are commercialized.”
Projects with lower emission intensity will be more sought after and are more likely to progress, they said.
While higher gas prices are likely to underpin further investment in LNG, supply will be slower to respond than in previous cycles, the analysts said.
