Energy consultants Wood Mackenzie’s latest research reveals that uncontracted demand, by the world’s seven largest LNG buyers, could quadruple from 20 million metric tons today to 80 by 2030.

These north-east Asian LNG buyers—CNOOC, CPC, Jera, Kogas, PetroChina, Sinopec and Tokyo Gas—together account for more than 50 percent of today’s global LNG market of 300 million metric tons, a level of demand which is expected to rise to 180 million metric tons by 2030. This projected increase of contracted and uncontracted demand from Asian buyers is very good news for both traditional LNG exporters such as Qatar and Australia, the newcomers in the U.S. Gulf of Mexico and Russia’s Yamal as well as upcoming Mozambique.

LNG is going to be the chief beneficiary of the climate agenda, to contain the global rise in temperature to below 2 degrees Centigrade, economic development in emerging economies and parallel action against visible and destructive air pollution, most notably in China. As Nicholas Brown, Wood Mackenzie research director, has stated, “as China pushes on toward a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term.”

It is not only the world’s leading purchasers of LNG in Asia that are looking for new supplies of this cleaner energy resource but also buyers from other parts of the world, most notably Europe including Italy’s Enel, Britain’s Centrica and France’s EDF. This is especially the case as legacy LNG supply contracts of 20 years will expire soon, prompting the need to secure new supplies. It is likely that these new purchases will be both contract and spot market based, with an eye for low average costs and good security of supply.

Wood Mackenzie expects a record number of final investment decisions on LNG projects in 2019, potentially raising production by an additional 220 million metric tons per year. This represents a large and rapid forthcoming expansion in world LNG supply when compared to the early years, when supplies increased from 200 million tonnes in 2000 to 300 million tons in 2018, according to BP’s Energy Outlook for 2018.

Amongst the multiple large-scale projects that are likely to be given final investment decision approval are Russia’s $27 billion Novatek’s Arctic 2 LNG project, at least one of Anadarko’s Mozambique schemes and possibly three or more American-based expansion projects. There are also proposed expansion schemes in the Pacific region including Australia’s Gorgan and Woodside and in Papua New Guinea, which are expected to get the green light soon. It is clear, according to Brown, that “Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market.”

However, LNG exporters could face some market turbulence arising from growing market liberalization in more mature markets such as Japan, South Korea, and Taiwan, which means more opportunities for short contracts, the spot market and flexible destination contracts with the rise of portfolio players and traders. Moreover, Brown suggests that, “oil indexation will continue to dominate markets due to familiarity and ability to hedge, Asian buyers should be more inclined towards hub indexation to boost diversity and enable sales into Europe.”

This year will likely be a bright one for new LNG export capacity approvals, with Asian buyers being the main source of demand as their economies grow and they transition towards a low carbon economy. For potential LNG suppliers the main consideration must be that their new projects due to come online in the 2020s don’t cause a supply glut and collapse in non-contracted-for LNG prices.

Nicholas is a hugely experienced upstream energy correspondent and expert that writes and provides consultancy services for a range of business and media clients worldwide. Reach Nicholas at info@nicnewmanoxford.com.