Page 10 - GLNG Week 37

GLNG COMMENTARY GLNG

Source: BP
But while BP itself is targeting net zero emis- LNG trade will bounce back strongly from the
sions from its operations by 2050, the net zero impact of coronavirus (COVID-19), more than
scenario in its outlook requires a co-ordinated doubling over the first half of the outlook from
global effort, significant investment and high 425bn cubic metres in 2018 to around 1.1 tcm by
carbon prices, as well as meaningful changes the mid-2030s. Thereafter LNG trade is antici-
to societal behaviour and preferences. Thus pated to decline, falling to around 970 bcm by
it seems fair to assume that short of an event 2050. The most pronounced decline is expected
that forces such dramatic – and long-lasting – to be seen in China.
changes, the net zero scenario is less likely to play “The pace of this decline in LNG exports
out than the others. after the mid-2030s is greater than the speed of
BP envisions LNG helping to create a “more depreciation of liquification facilities, implying
competitive, globally integrated gas market” that towards the end of the outlook some facili-
under both the business-as-usual and rapid ties need to be operated at less than full capacity
scenarios. or shut down prematurely,” BP said.
In the business-as-usual case – which still
assumes change, albeit at the same pace it has What next?
previously occurred – LNG trade is projected to BP noted that the scenarios it had outlined in its
rise above 1 tcm by 2050. Even in this case, how- outlook were not predictions of what is likely to LNG imports
ever, most of the growth is anticipated to take happen, or indeed what the company wanted
place in the nearer term, with the next 10 years to happen, but rather an exploration of differ- are initially
or so accounting for roughly 60% of it. ent judgements and assumptions relating to the expected to play
The US, Africa and the Middle East are pro- energy transition.
jected to be the main sources of incremental sup- “The scenarios are based on existing and a significant role
ply. Asia is anticipated to be the main market for developing technologies which are known
these rising exports, along with the EU, which about today and do not consider the possibility in coal-to-gas
BP said would remain an important balancing of entirely new or unknown technologies emerg-
market for LNG. ing,” the super-major added. switching.
The same regions are predicted to be the It is worth noting that the outlook has been
leading sources of supply and demand under published during a highly unpredictable year.
the rapid scenario. However, under this scenario, This may serve as a timely reminder of how dif-
LNG trade is anticipated to grow more rapidly ficult it is to make projections about the future
initially, before slowing significantly over the – and it is thus not surprising that BP is seeking
second half of the outlook period. not to present its scenarios as predictions.
This is because LNG imports are initially Looking back instead of forward, it is not so
expected to play a significant role in coal-to-gas long ago that future scenarios revolved around
switching across China, India and elsewhere in peak supply. The fact that all of the scenarios set
Asia, before falling back as these countries pivot out in BP’s outlook feature peak demand instead
towards greener alternatives. illustrates how much, and how unexpectedly,
Under the rapid scenario, BP projects that things have already changed.™

P10 www. NEWSBASE .com Week 37 18•September•2020