Global Natural Gas Supply Needs $7 Trillion Investment To Meet Demand

While the world is in the midst of an energy transition,  the complete move from fossil fuels to renewables won't be realized anytime soon. Consequently, natural gas is expected to replace the dirtier fossil fuels through 2050. However, there are growing worries about the world's NatGas supply, especially in the absence of new investments

To ensure a smooth energy transition, new figures show countries need to spend $7 trillion on new liquefied natural gas (LNG) export plants, upgrading facilities, and developing new gas fields, according to Bloomberg, citing a new report from the Institute of Energy Economics, Japan. 

The scenario assumes a 56% reduction in emissions by 2050, as emerging nations will not be able to achieve carbon neutrality by the middle of the century, the report said. If emissions remain at current levels, nearly $10 trillion will be needed to maintain adequate gas supply through mid-century.

Differing forecasts for gas consumption and ambitious net zero proposals have hampered future planning, the International Gas Union said in a report earlier this week. - Bloomberg

Bloomberg's senior energy reporter Stephen Stapczynski posted on X IEEJ's forecasts showing how much the world needs to spend on gas investments during the energy transition to avoid future shortages. 

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.

A separate report from the Swiss-based International Gas Union (IGU) also warned about the world's NatGas supply unless there was a surge in investments. "Restoring a sustainable balance in the global gas market is imperative and requires addressing the existing supply shortfall," the IGU said in a report. 

Nevertheless, "uncertainty over the LNG market's future trajectory and the role of gas in the energy transition continues to weigh heavily on — and in some cases delay — investment decisions," the IGU said. "The level of future natural gas supply has been largely left to chance."

Natural gas will remain an essential energy source for decades to come. However, challenges such as high-interest rates and snarled supply chains might lead to a potential financial crisis in the offshore wind energy sector.