Page 13 - GLNG Week 50 2020

GLNG COMMENTARY GLNG

Wood Mackenzie highlights

LNG market recovery but

warns of long-term risk

Consultancy Wood Mackenzie has pointed to an improved short-

term outlook for LNG, but has also warned of a long-term risk in a
decarbonising world

PERFORMANCE TWO separate releases from consultancy Wood Long-term considerations
Mackenzie over the past week illustrate how Wood Mackenzie’s view of long-term LNG risk
WHAT: LNG could be facing an improved outlook is underpinned by an accelerating energy transi-
Wood Mackenzie has in the short term but considerable long-term tion. The consultancy’s base case implies global
forecast a short-term risk. On December 9, the consultancy released temperature increases being limited to 3 degrees
recovery, but long-term a statement to accompany a new report, which Celsius by 2040. However, it has estimated that in
risk for LNG. showed that a “2-degree scenario” – involving a scenario where warming is limited to 2 degrees
global warming being limited to 2 degrees Cel- Celsius – in line with what was deemed accept-
WHY: sius – would eventually put around 77% of new able to the global community under the Paris
Demand is currently LNG supply at risk. Agreement – only about 145bn cubic metres per
rebounding, but in the Then, a December 11 opinion piece from year of additional LNG supply would be needed
long term the consultancy Wood Mackenzie’s Americas vice-chair, Ed in 2040. This compares with 450 bcm per year in
believes 77% of new LNG Crooks, highlighted a recovery in LNG demand Wood Mackenzie’s base case outlook.
supply is at risk from that is currently underway and said this had Under a 2-degree scenario, the consultancy
decarbonisation. transformed the immediate outlook for US sees green hydrogen – produced using renewa-
exporters of the fuel. bles – becoming a “game-changer” that becomes
WHAT NEXT: But even with LNG spot prices and demand a major competitor to gas consumption towards
The risk comes into rising, and exports looking economically the end of 2040 and accounts for 10% of total
play under a “2-degree attractive again, there are long-term concerns primary energy demand by 2050. Meanwhile, it
scenario”. for exporters of the fuel to consider before final also projects that gas would be increasingly dis-
investment decisions (FIDs) are made on new placed by increased investments in renewables
capacity. and energy storage in the power sector, as well

Hydrogen is increasingly
expected to compete
with natural gas in a
2-degree scenario.

Week 50 18•December•2020 www. NEWSBASE .com P13