Elevated LNG costs from the US-Iran war could price out developing countries once seen as key sources of future demand growth from being able to afford supplies, LNG executives said this week.
Before the war, LNG developers were planning for a global LNG surplus beginning this year to unlock new demand in developing countries throughout the remainder of the decade. But damage to Qatar's LNG infrastructure and disruptions to its expansion plans may make LNG too expensive for those countries' fuel mixes, LNG executives said at the CERAWeek by S&P Global conference in Houston, Texas.
Rapid growth for downstream LNG demand will come from developing economies that have less access to credit, so they cannot afford LNG at high prices, Cheniere chief commercial officer Anatol Feygin said.
"That's the challenge that this market is going to have to navigate with this incremental, massive shock to the system," Feygin said.
In a separate panel, Alisa Newman Hood, executive vice president of LNG import infrastructure firm Excelerate Energy, cited Bangladesh's decision to close all universities in early March to conserve electricity as an example of demand destruction. Wealthier Asian countries can turn to the spot market when contracted supplies are cut off, but it hits hardest on governments that cannot afford the surging prices, she said.
Long-term growth for LNG will be capped unless prices remain stable and affordable, Cheniere chief executive Jack Fusco said in another panel.
Potential delays to Qatar's planned 40mn t/yr of expansions are the "most impactful", Venture Global chief executive Mike Sabel said in an interview with reporters.
"That's an enormous amount of volume that the market was expecting on a certain schedule," Sabel said.
Traders in the forward curve have already begun pricing in the likelihood of those delays, along with the potential for 12.8mn t/yr of Qatar's 77mn t/yr Ras Laffan being off line for three to five years after a missile strike this month. Seasonal prices in the European benchmark TTF were trading Wednesday above $10/mn Btu through the winter of 2028-2029, Argus data show. Before the war, seasonal TTF prices were trading below $10/mn Btu from summer 2027 onward.
