LNG Reality Check: Why Energy Security Now Depends on Ignoring Fantasy "Forecasters"
Over the past three years, the global LNG market has shifted dramatically. What once looked like a future of comfortable abundance is now revealing structural tightness — a reality many forecasts still underplay. Governments, banks, developers and utilities that rely on out-of-date supply projections risk serious energy-security exposure. It’s time to look past optimistic PowerPoint decks and ground decisions in today’s facts.
The Shift Since 2022: From Surplus to Risk
Before, during and after, Russia’s invasion of Ukraine, many major LNG "Forecasters" envision a world in which liquefaction capacity would grow fast enough to keep pace with demand. They project significant global surplus by 2030. But that narrative has unraveled. Over the last five years, these companies have never forecasted the demand model correctly, not once in the last five years. But every stake holder basis the future of energy and LNG demand and production on false forecasts that have never proven to be correct.
Between geopolitical tensions, permitting snarls, and upstream disruptions, the LNG market has grown tighter. European markets replaced lost Russian pipeline gas with LNG, and Asia’s demand rebounded strongly. Meanwhile, many greenfield export projects have run into unexpected delays or financing risks as investors question the demand requirements when forecasters predict LNG to be abundant and cheap.
Today, publicly available data suggests that global supply may not be as elastic as previously assumed. According to the International Gas Union (IGU), global liquefaction capacity was around 494 Mtpa in 2024, while trade volumes (per Shell’s LNG Outlook) landed at roughly 407 Mtpa. These figures show a market already running at high utilization, with limited cushion for future shocks or rapid demand growth.
Why Many Forecasts Are Too Optimistic
Several common assumptions underpin overly bullish LNG supply forecasts. These are not necessarily mistakes — but they often omit key risk factors, resulting in a structural optimism that may mislead decision-makers.
1. On-Time Project Commissioning
Forecasts often assume that sanctioned or under-construction stick built projects will finish exactly on schedule. In reality, greenfield stick built LNG developments regularly experience delays due to supply chain, labor, financing, technical complexity, or security risk. That risk is particularly high in regions like Mozambique and Papua New Guinea, or for projects exposed to geopolitical instability.
2. Counting Pre-FID Volume as Certain
Some analysts include “probabilistic” project volumes — i.e., those not yet fully sanctioned — in their base-case supply curves. While useful for modeling, these volumes carry significant risk. Not all projects reach a final investment decision (FID), and even those that do may slip in timing or scale.
3. Underestimating Geopolitical and Regulatory Risk
Many forecasts underestimate the likelihood that permitting, regulatory, or security setbacks will derail or delay projects. Sanctions (e.g., on Russia), local security challenges (e.g., in parts of Africa), or policy reversals (e.g., stopping new export approvals) can significantly distort supply outcomes relative to idealized models.
These assumptions, shared by many forecasting institutions, lead to scenarios that may be internally consistent — but uncomfortably detached from risk-realistic outcomes.
What a Realistic 2026–2035 Supply Picture Might Look Like
Putting together publicly available data — on capacity in operation today, confirmed additions, and risk-exposed projects — suggests a more constrained supply future than many consensus forecasts imply.
• Current Capacity (2024): ~494 Mtpa (IGU)
• Firm Additions to 2030: Around 100–120 Mtpa, primarily from the U.S. and Qatar
• United States: several liquefaction trains under construction or sanctioned
• Qatar: North Field East (~32 Mtpa) and North Field South (~16 Mtpa), scheduled to commission in the mid-to-late 2020s
• High-Risk Additions: Mozambique, Nigeria, Papua New Guinea, Russia, and other regions remain uncertain due to political, financial, or technical risk
• Declining gas productions in The Netherlands, Malaysia, Australia, Egypt and Bahrain.
When you apply realistic utilization assumptions and factor in project slippages, the effective operational capacity by 2030 may land in the 550–580 Mtpa range. Meanwhile, many demand scenarios point toward LNG demand of 700-800 Mtpa or more by that time — leaving limited headroom for error. While requiring over $400 billion in deployed investment in the sector.
In other words, the margin of safety may not be nearly as large as some past forecasting companies suggest.
Who Stands to Lose If Supply Falls Short
If the tighter supply outlook materializes, the risks are real and widespread.
• Europe: The region remains heavily dependent on LNG, especially in winter, to compensate for reduced or eliminated pipeline supply from Russia. When LNG is tight, Europe could face higher prices or limited cargo availability.
• Demand-Constrained Asian Buyers: Nations like Pakistan, Bangladesh, India and the Philippines — which often pay lower prices — may be outcompeted for cargoes. In severe shortfalls, they could be forced into rolling blackouts, coal restarts, or other compromise options.
• Utilities and Policymakers: Many governments and utilities still plan on long-term gas supply under assumptions of abundance. If that façade breaks, they may lack the infrastructure or contractual hedges to absorb real supply shocks.
What Energy Security Needs Now
To navigate this tighter reality, policymakers, financiers, and utilities need to shift their mindset and planning practices:
1. Strategic LNG Storage
Countries should build or expand onshore and floating LNG reserves, similar to strategic petroleum reserves. This buffer can absorb disruptions and give time to react when spot markets tighten.
2. Realistic Stress Testing
Financial models should assume sustained higher LNG prices (much higher than pre-2022 norms) for multiple years. Contracts, loans, and risk frameworks need to reflect that possibility.
3. Long-Term Take-or-Pay Contracts
Buyers may need to offer more attractive long-term deals to secure supply. In a constrained market, flexibility comes at a premium — and locking in volumes now may be cheaper than scrambling later.
4. Rigorous Supply Risk Management
Decision-makers should draw a firm line between:
• capacity that is already under construction
• capacity at pre-FID risk
• aspirational or “probabilistic” capacity not yet committed
Policies, infrastructure planning, and financial commitments should be built on the first category, not the third.
The Age of Easy Abundance Is Over
For years, the LNG narrative leaned on the idea that molecules are fungible, capital is abundant, and supply would always outpace demand. That story no longer holds.
The shock of 2022—and the slow, uneven recovery that followed—exposed the fragility in many supply assumptions. While many forecasters continue to model bullish baseline scenarios, publicly available capacity data and risk profiles suggest a far more constrained reality.
Energy security in the coming decade won’t be guaranteed by corporate optimism or rosy research "Forecasters" reports. It will require sober planning, investment, realistic risk assessment, and strategic action.
European governments have already seen the consequences of unstable energy supplies. Just two days before COP last year, renewable generation collapsed across much of the continent — and Spain faced a power system stress event lasting more than 24 hours.
These moments should serve as a wake-up call. Without reliable, diversified, and sustainable energy strategies, nations place their economies, industries, and citizens at unnecessary risk.
Energy security isn’t theoretical. It’s operational, it’s measurable, and it’s essential. The stakes could not be higher.
If governments, utilities, and financiers fail to adjust, they may find themselves exposed not just to high prices — but to actual shortages. That’s not a forecast; that’s today’s reality.