Global LNG market could grow by 200 mln in 2022 amid decline in Gazprom's pipeline deliveries - Mikhelson
VLADIVOSTOK. Sept 7 (Interfax) - The global LNG market could grow by 200 million tons in 2022 amid a decline in pipeline gas supplies by Gazprom , Novatek CEO Leonid Mikhelson told reporters at the Eastern Economic Forum.
He added that the global gas market will see a deficit in 2023-2024. Mikhelson expressed the opinion that rising global gas prices are a bad trend - they must go down, otherwise demand will fall.
"Forecasts for market growth are somewhere in excess of 200 million tonnes by 2021 (380-390 million tonnes was last year). This will depend on how much of Gazprom's pipeline gas leaves the market. If (I'm not taking responsibility for these figures, I'm just imagining) 100 billion cubic meters will leave - that's 80 million tonnes. In the medium term we need to close this big hole," Mikhelson said.
"In H1, Gazprom's deliveries [to Europe] fell by approximately 36% (approximately 25 billion cubic meters), and the supplies of LNG increased by pprecisely 25 billion cubic meters (18 million tonnes), and 54 billion cubic meters of LNG arrived in Europe. And this was mainly due to the increase of American LNG supplies," Mikhelson said.
"Something unbelievable is going on" with prices, he said.
"This is a very bad trend for us as a producer. It's very important that prices start to fall now, to come back to normal. Because the global energy industry cannot work with such prices anyway, and they will look for something to replace them, ways to replace them," Mikhelson said.
When the investment decision on Arctic LNG 2 was made, there were concerns that the market was oversaturated, the Novatek chief said. "I answered: when gas prices are low, consumption growth will be quite different, countries will start revising their energy strategies in favor of gas, and we have no doubts about the possibility of selling all the products. Now it's hard to predict. In my opinion, these people who make decisions do not themselves know what decision they will make tomorrow, and I think there's no reason to predict them," he said.
"Unfortunately, in 2023-2024 and at least for half of 2025, nothing super substantial will happen in terms of falling prices, because what I am seeing on the market, America will introduce a little less than 30 million tonnes somewhere between 2024 and 2025, and another 30 million tonnes from 2025 to 2027, while Qatar has adopted a program [to ramp up] to 32 million tonnes, but this will come online from 2025 to 2027. There is one project in Australia for 2025 with a total capacity of 5 million tonnes. That is just to close this hole, not counting any growth, there is absolutely not enough volume for consumption in the world. There is a big gap in 2023-2024," Mikhelson said.
Novatek plans to launch Arctic LNG 2 in 2024-2026, he said. "If we look at 2023-2025, it will be about 25% of global production growth - Arctic LNG 2 alone," Mikhelson said.
No one wants to sign long-term contracts now, the Novatek chief said. "The producer wants to sell at today's prices and the consumer wants to buy at other prices," he said. In his opinion, if prices fall in 2023-2024, signing long-term contracts will begin to stabilize the price market.
"Germany's economy minister Habek has gone to Qatar [to negotiate LNG supplies}. I am somewhat informed - he was told, please, at least 15 years [the expected term of the contract]. And he said: "We don't need 15 years. That is why they have what they have," Mikhelson said.