LNG supply

US: Venture Global’s plants lead new wave of capacity with record build times

Source: BloombergNEF, Bloomberg Terminal’s AHOY JOURNEY. Note: Forecasts are as of May 31, 2022.

Source: BloombergNEF. Only destination specified, reported contracts in 2022-26 shown, by regions. Cheniere includes Sabine Pass, Corpus Christi and portfolio. Note: Plaquemines refers to Plaquemines Phase 1.

Operational: US LNG supply from existing projects is expected to remain stable through 2022-26. The base-case forecast assumes all US plants are running at near capacity given market conditions. BNEF projects an average 100% utilization for Cheniere’s plants in 2022-26.
- Cheniere received approval to raise exports by 720 million cubic feet per day (5.5 million tons a year of LNG) to non-FTA (Free Trade Agreement) countries in March 2022. Europe is mostly non-FTA. A third of Cheniere’s contracts have unspecified destinations, which can now be directed to more markets with the approval.
- Downside risk to plant feedgas supply from gas price volatility is low, as the major gas plays are deeply in-the-money at current prices.
Under construction: Construction progress at Golden Pass is on track and first LNG production is expected in 3Q 2024. Qatar Energy offered Golden Pass volumes to Germany, but the parties are at loggerheads over destination flexibility and tenure of the contracts. Plaquemines LNG (Phase 1) reached final investment decision (FID) in May 2022, with first LNG slated for 2024. BNEF expects first production could begin in 4Q 2024 given its similar modular approach to Calcasieu Pass, which took 29 months from FID in August 2019 to first LNG. The majority of the supply is contracted to Chinese and European buyers. Plaquemines could reduce the impact of potential delays at other projects, such as Qatar and Mozambique, if delivered on schedule.

Proposed: A number of US LNG proposals are gaining traction again, but BNEF’s high-supply scenario only pegs three projects that might add capacity before 2026 – Corpus Christi Stage 3, Plaquemines Phase 2 and New Fortress’s ‘Fast LNG’, which targets first LNG in 4Q 2023. Other proposed projects, including expansions at Cameron and Freeport, may only see production after 2026 and are not included in this scenario. See the FID Outlook section in this report for more.

Russia (Atlantic): Sanctions could derail delivery of 29% of anticipated supply in 2026

Sanctions on delivery of critical processing equipment and technology application pose a huge risk to Russia’s LNG supply growth over 2022-26.

Arctic 2: BNEF’s base case considers all three trains will come online, but with a delay. EPC contractor Technip Energies expects to fulfill its contractual obligations to the project while complying with sanctions. Linde, the project’s liquefaction process designer, announced it would suspend work on new Russian LNG projects, without specifying Arctic LNG 2. The liquefaction process is a largely immutable aspect of an LNG project, barring a redesign of the project.
- BNEF’s de-risked Russian supply assumes only Train 1 will be complete between 2024-26. Novatek reported 78% progress on Train 1 in February 2022, with all modules required for its gravity-based structures already delivered. Trains 2-3 could be delayed beyond 2026 due to sanctions on Chinese module fabricators and specialized shipping companies.
- Financing remains a moderate risk, as non-Russian funding makes up an estimated 48% of the project’s budget. With sanctions involving Russian banks and several stakeholders halting provision of funds, Novatek could seek alternative funding from Chinese or Indian buyers, who may want competitively priced contract supply given the current high spot prices.

Source: BloombergNEF, Bloomberg Terminal’s AHOY JOURNEY (historical). Note: Portovaya LNG is excluded as it will likely support Russia’s domestic LNG demand.

Source: BloombergNEF, Bloomberg News. Note: Risk analysis is BNEF’s assessment.

Baltic LNG: Linde’s exit from new Russian projects could mean it might not continue work on Baltic LNG, which reportedly began construction in May 2021. Europe’s aim to end its reliance on Russian gas could erode Gazprom’s revenues, impacting the project’s funding as well as eliminating Europe as a prospective buyer of Baltic LNG volumes. The project has no buyers as of June 2022. Russia’s Wealth Fund could potentially step in to provide $12 billion toward the project.

Yamal LNG: Stable supply is forecast through 2022-26, producing at an average of 15% above its nameplate capacity. However, Yamal is also exposed to sanctions, having declared force majeure on cargoes sold to Gazprom’s trading arm after it was seized by the German government. Trade flows of Yamal LNG are likely to change in the near term, depending on the Russia-Ukraine war situation.

Global FID outlook: 133 million tons of new capacity waiting to be approved

Source: BloombergNEF. Note: There are other projects proposed globally that are not shown on the map and include projects where developers announced FID targets between 2022-23. Potential FIDs include projects with targets that may go beyond 2023. NFE refers to Qatar’s North Field Expansion.

Cheniere’s Corpus Christi Stage 3 expansion, Venture Global’s Plaquemines Phase 2 and New Fortress Energy’s Fast LNG in Grand Isle, Louisiana, are three proposed US projects that BNEF anticipates could be approved and make first LNG for the 2022-26 window. The modular design advantages of the three projects is what pushes them ahead. They could raise global export capacity by 22.8 million tons by 2025, if these projects are approved in 2022 or 2023. Corpus Christi, however, is the only BNEF top pick for FID in 2022, which would add 10 million tons of capacity; the other two might be later.

Other projects that employ relatively traditional train design sizes may only come online between 2027-28, if green-lit in the next two years. BNEF categorizes these proposed projects as ‘wild cards’ and ‘potential FID’ projects, which make up a total 123 million tons of capacity. ‘Wildcards’ could reach FID in 2022, although some hurdles to project sanction remain, while ‘Potential’ candidates are more likely to reach FID after 2022. Many proposed US projects have revived commercial negotiations, driven by Europe’s desire to reduce reliance on Russian gas.