Page 4 - GLNG Week 16 2021

GLNG COMMENTARY GLNG

Baker Hughes raises projection

for LNG demand

Oilfield services firm Baker Hughes said in its first-quarter earnings call that it

has raised its expectations for global LNG demand to 600-650mn tpy by 2030

PERFORMANCE OILFIELD services firm Baker Hughes has an Supply expectations
increasingly bullish outlook for the global LNG If demand expands as anticipated by Baker
WHAT: industry, as well as natural gas more broadly. On Hughes, this will also make room for more sup-
Baker Hughes has raised the company’s first-quarter earnings call, Baker ply to come online. New liquefaction capacity is
its global LNG demand Hughes’ chairman and CEO, Lorenzo Simonelli, already under construction in countries includ-
forecast to 600-650mn said the energy transition was expected to bolster ing Qatar, Russia and the US, in addition to
tpy by 2030. future demand for the super-chilled fuel. which, a number of proposals are on the table
In line with these expectations, Baker Hughes but have not yet reached the final investment
WHY: has revised projections for future demand decision (FID) stage.
The company expects upwards. The company now anticipates that Under its updated outlook, Baker Hughes
the energy transition to global demand for LNG has the potential to anticipates that 3-4 liquefaction projects will
bolster LNG demand. reach 600-650mn tonnes per year by 2030, up reach FID in 2021, which will be followed by a
from its previous projection of 550-600mn tpy. “strong pipeline of opportunities in 2022 and
WHAT NEXT: This outlook is based on recent third-party beyond”, according to Simonelli. In response
Under its updated analysis and supported by discussions with to an analyst question, he also said there were
outlook, Baker Hughes some of Baker Hughes’ customers, according a lot of offtake discussions underway currently
anticipates 3-4 to Simonelli. He also cited a “resilient” 2020 for based on what his company has heard from its
liquefaction projects natural gas and LNG, despite the short-term customers.
reaching FID in 2021. impact of the coronavirus (COVID-19) pan- This outlook is more bullish than some of
demic on demand. the expectations of others. Consultancy Wood
“The resilience of demand during the pan- Mackenzie, for example, said last month that
demic combined with the acceleration of cli- it anticipated few new LNG FIDs over the next
mate commitments has resulted in improving two years, though it warned of a supply gap of
optimism over the demand outlook,” Simonelli 50mn tpy by 2030 that it expects to widen fur-
said. “This has also been reflected in our con- ther still to over 170mn tpy by 2035.
versations with customers. As more nations, Baker Hughes, meanwhile, expects more
such as China, make net-zero commitments, it FIDs in both the short and longer term.
is becoming increasingly clear that a phase-out “As you look at getting to 600-650mn tonnes
of coal in favour of natural gas is necessary to by the end of the decade from a demand per-
reach their goals, as well as broader global car- spective, that means we’ve got to have approx-
bon targets.” imately 700-800mn tonnes of nameplate

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