LNG industry buoyed by positive outlook: TotalEnergies CEO

(London) The LNG industry’s outlook is looking increasingly optimistic amid uncertain renewables rollout and expected demand growth particularly in Asian countries, with the fuel expected to maintain a key role in the energy mix in the medium-long term, a conference in London heard on Tuesday.

TotalEnergies CEO, Patrick Pouyanne told the Wood Mackenzie Gas LNG and the Future of Energy 2023 conference that the company continues to see gas as a key complement to renewables, with coal to gas switching “the low-hanging fruit” of the energy transition.

The company is focusing on brownfield LNG projects in the U.S., Mozambique and Papua New Guinea as the LNG market requires “a very large resource base”.

Adding new trains to existing U.S. projects as well as expanding Mozambique capacity is on the cards for the company beyond 2030.

A growing global population particularly in the Global South is a key challenge to the energy transition, he said.

Panellist majors Shell and Eni said there’s growing confidence in the role of gas globally as world economies look set to breach the Paris Agreement target of 1.5 degrees Celsius global warming.

The LNG industry “has a lot to feel confident about” as the world “needs more LNG” beyond the 200 million tonnes currently under construction, with demand growth focused on China and South East Asia, Steve Hill, executive vice president at Shell Energy said.

The Ukraine conflict has brought back the issue of energy reliability in recent years, and gas can be “a source of stability in the equation” Cristian Signoretto, Eni’s director of global gas and LNG said, adding there are “ample reserves” of gas that can be tapped into globally as the cost of gas is set to come down in the coming years amid growing production.

A “global carbon price” would ensure “an economic incentive for countries to switch away from gas,” he said.

Eni is focusing on upstream development of niche projects including Mozambique, Congo and Indonesia, with the latter expected to be ramped up in the coming years with production focused on supplies to Asian markets.

Overall, Eni is targeting 18 million tonnes/year of contracted LNG capacity by 2026.

Meanwhile, Europe should look to further develop its storage capacity to boost its energy security, he said.

Price volatility is set to remain in the near future, although global LNG prices should ease from 2025 onwards amid new capacity coming on stream, Massimo Di Odoardo, vice president of gas and LNG research at Wood Mackenzie said.

Global LNG demand is projected to rise to around 600 million tonnes/year by 2035 from around 400 mmtpa now.

North America will remain the focus of new supply developments. In addition to that, other projects such as Eni’s Coral Norte FLNG, Chevron’s Leviathan phase 2 and Exxon Mobil, Santos and Total Energies’ Papua LNG will further diversify supplies.

LNG markets are also seeing the portfolio players’ role becoming increasingly predominant. Another key trend is the rising role of private equity, infrastructure funds and Middle Eastern capital in the financing of new upstream projects, he said.