Liquefied natural gas producers’ short-term strategy to cash in on the demand frenzy from European nations, particularly those looking to replace pipeline volumes from Russia, could force developing countries to return to burning coal as they cannot afford the prevailing spot prices.
High LNG prices today could actually dent demand later this decade if volumes become unaffordable for many, Pakistan GasPort chairman Iqbal Ahmed told delegates at Gastech 2022.
“Today’s greed is tomorrow’s failure, let me put it this way. They [the producers] are very happy getting $40 [per million British thermal units]… but they are killing demand, they are encouraging conversion to other sources.”
Looking ahead, after LNG producers invest billions more dollars over the next three to four years as they race to expand global liquefaction capacity, “they will be the ones who will be coming with a begging bowl”, he said.
LNG producers need to have a wider outlook, he said: “They should not just focus on today”.
Ahmed said that many emerging economies in Asia and Africa will be forced to look away from gas, despite it being the cleanest fossil fuel, as it is simply becoming unaffordable.
“Everybody loves gas, it’s a clean fuel… the distribution networks exist. But all the gas is being sucked up by the developed countries and there is almost nothing left for the emerging countries.
“We cannot afford the prices that the European or Americans can and therefore what options are left to us?”
More than 100 million tonnes per annum of new global liquefaction capacity is expected to be added before 2030, but by then a lot of demand could be destroyed, with potential customers converting to solar or coal — irrespective of what the latter does to the environment, Ahmed told the Gastech audience on Wednesday.
He called for the integration of developing and developed nations’ economies and urged gas producers to adopt a “proper prospective”, so that the developed countries can carry emerging nations through these difficult times.
‘Only credible solution’
“LNG is the only credible solution to get to net zero,” Excelerate Energy’s chief commercial officer Daniel Bustos said.
“But if you want to succeed on that [front] we need to make sure that LNG is reliable, is flexible and is affordable. We need to solve the crisis of affordability, not only in Europe but in the rest of the world.”
Pakistan GasPort owns and operates a 750 million cubic feet per day LNG import terminal at Port Qasim, Karachi, while Excelerate owns and operates the Moheshkhali LNG import facility in Bangladesh that started operations in 2018.