Liquefied natural gas (LNG) plays a pivotal role in the world’s changing energy landscape. By substituting dirtier fuels, LNG curtails carbon dioxide emissions and enhances air quality. This underscores its vital importance in the energy transition.
Bloomberg recently spoke with Kenichi Hori, president of Japanese trading house Mitsui & Co., who said global LNG demand will likely be much higher than forecasted and the current “pipeline of projects” won’t be enough.
“Announced projects in the world still won’t make up for the supply needed when considering the energy transition that will take several decades,” Hori said.
Hori is one of Japan’s top traders of LNG and believes, just like Chevron Corp. and Shell Plc, that the fuel will play a crucial long-term role in the energy transition. His comments follow a fracturing of the global LNG market as Europe no longer sources a majority of the fuel from Moscow but instead relies on the US and other countries abroad.
According to BloombergNEF data, global LNG demand is set to rise 3.4% annually over 2022-26, reaching about 444 million metric tons. This comes as countries and companies view LNG as one of the cleanest fossil fuels that can lower emissions. Bloomberg noted supply will be tight until 2026 – after that, new projects are forecasted to come online.
Hori pointed out his firm has “projects in the US, Middle East, and Africa” to ensure a diverse supply chain.
He added his firm is interested in signing a contract with Qatar. He stated the Middle Eastern country is an “important source of LNG” as Japan strives for further diversification.
Besides LNG, Hori invested $6.4 billion in an offshore wind project off Taiwan and exploring opportunities in e-methanol.
“All these projects are going to shape the future of our portfolio that is transitioning from a traditional energy business to a low-carbon-intensive era,” he said.
Last month, Lorenzo Simonelli, chairman and CEO of service company Baker Hughes, was quoted by Reuters at Gastech, the industry’s largest conference in Singapore, as saying, “Natural gas will continue to play a critical role as a bridging and destination fuel for the energy transition.”
The biggest takeaway is that LNG has a bright future as it becomes the ‘transition fuel’ as the world progresses to net-zero emissions by 2050.