Worldwide LNG Trade On Growth Path to 2050, with U.S. Share Doubling to 20%, Says BP
The global liquefied natural gas (LNG) trade is predicted to grow to 2050, lifted by emerging economies and the shift to lower carbon fuels, according to BP plc.
The integrated major’s latest annual forecast, Energy Outlook 2022, explores the uncertainties surrounding the energy transition to a carbon-free world using Accelerated, Net Zero and New Momentum scenarios.
BP’s chief economist Spencer Dale and his team explored the range of possible pathways for the global energy system to 2050, which helps to shape the strategy for the London-based major – and other firms.
Still, the latest report issued Monday has more uncertainty than previous forecasts because of Russia’s invasion of Ukraine, Dale said. Since the incursion, many Western nations have placed severe sanctions on Russia, and they have banned its oil and natural gas exports.
“At the time of writing, the world’s attention is focused on the terrible events taking place in Ukraine,” he said. “The scenarios included in Energy Outlook 2022 were largely prepared before the outbreak of the military action and do not include any analysis of its possible implications for economic growth and global energy markets.
“Those implications could have lasting impacts on global economic and energy systems and the energy transition. We will update the scenarios as the possible impacts become clearer.”
The Outlook describes three scenarios: Accelerated, Net Zero and New Momentum, which explore a wide span of possible outcomes in the transition to a lower carbon energy system. “Developments since the previous Outlook was published in 2020 show some signs of progress,” Dale said. “Government ambitions globally to tackle climate change have increased markedly.”
The key elements of the low-carbon system that are considered critical to achieve net-zero carbon emissions have “expanded rapidly,” Dale said. Installations for solar and wind power capacity have expanded, along with electric vehicle sales, blue/green hydrogen projects, and carbon capture utilization and storage (CCUS) proposals.
Still, oil and natural gas should “continue to play a critical role for decades, but in lower volumes as society reduces its reliance on fossil fuels,” Dale noted. “The energy mix becomes more diverse, with increasing customer choice and growing demands for integration across different fuels and energy services.”
The Accelerated and Net Zero scenarios assume that global climate policies will tighten, leading to a sharp decline in carbon dioxide equivalent (CO2e) emissions. The emissions decline in Net Zero is aided by a shift in societal behavior and preferences. New Momentum places weight on the increase in recent years to decarbonize and the likelihood those goals will be achieved.
Could LNG Trade Grow Then Dip?
According to BP, the LNG trade “grows strongly over the first 10 years of the outlook, increasing by around two-thirds in New Momentum and Accelerated, and one-third in Net Zero.”
Most of the growth is forecast to be driven by demand in emerging Asian countries, led by China and India, as they switch from coal. Outside of China, industrialization is seen supporting natural gas consumption.
“LNG imports are the main incremental source of this increased use of gas, accounting for 70-75% of the increased gas consumption in emerging Asia out to 2030 across the three scenarios,” BP economists said.
By the second half of the outlook, the Accelerated and Net Zero scenarios see LNG trade reversing. The use of natural gas “and hence need for LNG imports,” is seen declining across most of the world’s major LNG demand centers.
“The level of LNG trade by 2050 is only 10% higher than 2019 levels in Accelerated and around 20% lower in Net Zero,” according to BP. “In contrast, LNG imports continue to expand in New Momentum,” rising to 1,000 billion cubic meters-plus by 2050, “supported by growing imports into India and other emerging Asian countries. Europe also is seen as a major demand area for LNG.
“The growth in LNG exports over the first part of the outlook is driven by the U.S., which accounts for over 40% of the increase in LNG exports to 2030 in all three scenarios,” according to BP. “Growth in LNG exports is also supported by sizable increases in supply from the Middle East, Russia and Africa.”
The subsequent decline in LNG trade in the second half of the Outlook, in both the Accelerated and Net Zero scenarios, “is also borne disproportionately by the U.S., reflecting its higher transport costs to the remaining centers of LNG demand in Asia relative to the Middle East and Eastern Africa.”
However, gas exports from the United States and the Middle East are forecast to continue to grow in the second half of the Outlook in New Momentum, “reinforcing their role as the main global centers of LNG exports.”
U.S. Natural Gas Demand Up And Down
Other findings in BP’s Outlook for the United States specifically see strong growth in net oil and gas exports to 2050, but more so in the New Momentum and Accelerated scenarios.
“Oil supply is seen peaking at around 20 million b/d between 2025 and 2030 in all scenarios, and the U.S. share of global LNG trade doubles from around 10% in 2019 to over 20% by 2050,” BP noted.
Natural gas is forecast to account for one-third of U.S. primary energy, and it remains stable in New Momentum. However, it falls to 19% over the period in Accelerated and to 10% in Net Zero by 2050.
“Gas is displaced by electricity in the residential sector, and renewables take a more prominent role in the power sector,” BP economists predicted.
Overall, primary energy is likely to grow in the United States in all three scenarios in the short term. However, by 2050 it falls across all scenarios by 14-27%.
“Oil demand rises in the short term from almost 20 million b/d in 2019 but falls to a range of 3-12 million b/d by 2050,” economists predicted of U.S. growth. “Biofuels increases its share in liquids demand from 5% in 2019 to over 30% by 2050 in Net Zero.”
Domestic electricity demand is seen growing over the forecast period from 21% of final consumption to 32% in New Momentum, 48% in Accelerated and 57% in Net Zero. The share of U.S. wind and solar in total generation “grows strongly in all scenarios,” from 9% in 2019 to 52-70%.
Meanwhile, U.S. hydrogen supply is predicted to expand from around 8.8 million tons (Mt) today to 15-57 Mt by 2050. In the Net Zero scenario, U.S. hydrogen accounts for 13% of global supply.
“CCUS grows strongly across all scenarios and reaches 0.7-0.8 gigatons in Accelerated and Net Zero.”
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