Anticipated delays in developing liquefied natural gas (LNG) export projects in Mozambique could cause the market to tighten even more than expected later this decade, with forecasts flipping from surplus to deficit in 2029, according to a new report from Rystad Energy.
The Norwegian consultancy said it now expects a supply deficit of 5.6 million metric tons per year (mmty) in 2029 if the delays materialize, compared to its previous forecast of a 2 mmty surplus.
But the signs of an undersupplied market may become apparent before then, as Rystad now expects around 9 mmty to come off the market between 2026 and 2029. The consultancy forecasts an oversupply of 4 mmty in 2026, down from its previous forecast of 6.4 mmty.
The situation is expected to only worsen the following year, with the expected oversupply to shrink to 11 mmty from a previous forecast of 15.9 mmty. The biggest downgrade is anticipated in 2028, with oversupply amounting to 1 mmty, down from 9.3 mmty in Rystad’s previous forecast.
Post-2029, the market will start to “smoothen out,” with an anticipated supply deficit of 1.7 mmty compared to a previously expected surplus of 1 mmty.
The analysis means an even longer era of tightness in the LNG market, which is expected to contract between now and 2024 or 2025 as global demand balloons.
Rystad released the report following Total SE’s decision last month to stop activity and declare force majeure at its Mozambique LNG site under construction as escalating violence in the region poses a growing security threat. ExxonMobil, meanwhile, has delayed taking a final investment decision on its Rovuma LNG project in Mozambique. Together, the two projects represent 28 mmty of LNG capacity.
With production for Mozambique LNG now expected to start up in 2026, “buyers expecting volumes in the tight market years of 2024 and 2025 may need to look for other sources of supply,” according to the report. “This is likely to create upward pressure on prices as end-users search for alternative suppliers and portfolio players seek to cover short positions. Those without long-term contract coverage risk having to buy from an increasingly volatile spot market.”
However, Rovuma LNG’s delay may have the bigger market impact, as it is now expected to come online between 2027 and 2029 and its production would be removed from “an increasingly balanced market,” Rystad said.
“This could contribute to greater volatility and higher prices towards the end of this decade,” according to the report.
On the pricing front, Rystad expects Asian spot prices to reach $8.50/MMBtu between now and 2024 as the market tightens. But where it previously saw prices dropping closer to the $5.70 range beginning in 2027 as more global LNG capacity came online, it now expects prices to stay higher for longer.
“Asian spot prices could remain above $8/MMBtu in 2025,” according to the report.
“The downside risk in prices between 2026 and 2029 is also reduced by a better-balanced market – while we still expect prices to decline, there is higher likelihood for them to remain above $6/MMBtu in 2027.”
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