Global Gas and LNG Market: Outlook to 2030

  • ID: 4457598
  • Report
  • Region: Global
  • McKinsey Energy Insights
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The Share of Natural Gas in the Global Energy Mix Will Grow from 22% in 2016 to 23% in 2030, Driven Mainly by Growth in China, India, and South East Asia

In the latest update of our outlook, we dive deep into the discontinuities that could swing the gas markets one way or another. In China, the extent to which government targets on gas consumption are met could mean a 100 bcma variance in global gas demand by 2030. Renewables too have the potential to be a significant disruptor.

In the long term, the old paradigm of integrated mega-projects in LNG is being challenged. In the US in particular, the decoupling of upstream and midstream has improved project pacing and the ability to finance new liquefaction projects.

Our outlook explores the impact of key discontinuities on supply and demand, with a view of expected growth in LNG volumes and cross-border pipeline flows, and the impact of regional pricing mechanisms to 2030.

Key Findings

1. Demand driven by growth in the East - China, India, and South East Asia is expected to see the strongest demand growth on the back of continued strong economic growth, increased concerns about air quality, and growth in the industrial sector.

2. Supply growth from major resource holding regions - The large resource base in the US, the Middle East, and China will together account for ~70% of incremental supply of ~800bcma, increasing market share, and taking a larger share of international trade.

3. Gas still primarily consumed where it is produced - However the market will become increasingly interconnected through both cross-border pipelines and increasing LNG volumes, mostly in emerging markets. The volumes of LNG traded will increase from 350bcm to ~676bcm between 2016 and 2030.

4. LNG prices will have a major impact on the global gas industry - The pricing dynamics will be different in the short term until the early 2020s when the market is still oversupplied and change as the market become tight after 2022.

5. Post 2022, the world will require new FIDs on liquefaction projects - The relatively advantaged economics of brownfield and expansion projects and the decoupling of upstream and liquefaction in the US are resetting capex and project financing expectations - departing from the old paradigm of integrated mega-projects.

What's in the Report?

Market Overview

Demand and supply: What are the drivers of higher growth rate in gas vs. other fossil fuels? Which regions are driving global natural gas growth and where do we see the market for unconventional gas going? Delivery flows: What is the share of LNG vs. piped gas flows in the global gas consumption mix? Pricing: Regional sets of pricing mechanisms Key discontinuities: What is the impact of the five key discontinuities on the global gas and LNG markets?

Regional Deep-Dives

Our regional deep-dive sections covers supply and demand dynamics of each region and answers questions such as: What are conditions that Turkey needs to fulfil in order to become a leading local gas trade hub? Where from and how could China source additional gas imports to satisfy its rapidly growing demand? If South Africa were to scale up its gas industry, what might be the willingness-to-pay of possible gas end-users by sector?

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Key Charts and Tables

1. Demand Outlook to 2030

  • Primary energy demand
  • Global gas demand by region
  • Global gas demand by sector

2. Supply Outlook to 2030

  • Global gas supply by region
  • Global gas supply by type
  • Reserve-to-production ratio

3. Delivery Mechanisms - Piped Gas vs. LNG

  • Share of consumption, imported pipeline gas and imported LNG in gas consumption mix
  • Domestic consumptions, piped and LNG gas imports projections
  • LNG demand by country for recent and likely market entrants
  • Global LNG supply and demand balance to 2030
  • LNG exported production and spare capacity by country
  • Cumulative LNG supply under construction by country
  • Breakeven prices for new supply

4. Pricing

  • Price forming mechanisms by region
  • Global gas prices 2010-2017
  • Spot crude, LNG and TTF prices

5. Key Uncertainties

  • The pace of Asian gas demand growth
  • The gas supply mix configuration in Europe
  • Development of key market players’ business models
  • Evolving LNG buyer preferences
  • Declining costs of renewable technologies

6. Regional Deep-Dives

  • North America
  • Europe
  • China
  • South Asia
  • ASEAN
  • Japan, Korea, Taiwan
  • Middle East
  • Africa
  • Latin America
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