Analysts from Morgan Stanley Research said that the world’s natural gas consumption would increase by 25 to 50% by 2030, faster than any other hydrocarbons. The investment bank also raised its long-term LNG price projection to $10 per MMBtu, with spot prices expected to average 40% higher over the next decade, compared to the last five years. Earlier this month, Asian spot LNG prices hit a record of more than $56 per MMBtu as supply was outstripped by surging demand ahead of the winter heating season spurred by a post-pandemic economic recovery.
Morgan Stanley said at least 73 million tons/year of new LNG capacity is needed to meet consumption by 2030. These projects are estimated to cost about $265 billion to build. So far, around $200 billion of projects have been sanctioned since 2019 and are already under construction. Projects with lower emissions will be more likely to progress, the bank said. However, it noted that the industry would be slower to respond to higher demand despite higher prices.
Morgan Stanley said that more LNG would be needed during the initial stage of the energy transition. LNG consumption will outpace the increase in other fossil fuels over the next 10-15 years, with oil demand expected to grow in line with recent paces, while coal demand is expected to be stagnant. Asian countries such as China, India, Taiwan, Thailand, Bangladesh, Indonesia, and Malaysia are expected to lead LNG demand growth as they are expected to replace their coal power plants.
