LNG Market to Remain Tight Until 2027, Delaying Buyer's Market: Bloomberg

Europe's hopes of a buyer's market for liquefied natural gas (LNG) by mid-2025 have been dashed, with the market set to remain tight for at least another two years, says Javier Blas of Bloomberg. This comes as a series of project delays and continued strong demand in Asia have shifted the balance of power back in favor of sellers.

Blas, Bloomberg columnist covering energy and commodities, writes that the market will likely remain tight until early 2027 when new supply is expected to flood the market.

"The buyers won’t have the upper hand until early 2027 when new supply will finally arrive, potentially flooding the market for years to come," Blas notes.

This unexpected tightening of the LNG market stems from delays in several major projects, including the Golden Pass LNG export project in Texas, the Corpus Christi 3 project in Texas, and the Energia Costa Azul development in Mexico.

The Golden Pass project, co-owned by QatarEnergy and Exxon Mobil Corp., has been pushed back six months to at least the end of 2025, following a contractor dispute. Industry experts believe further delays are possible.

The Corpus Christi 3 project, run by Cheniere Energy Inc., is scheduled to start at the end of 2024, but full production is unlikely until late 2025 or early 2026.

The Energia Costa Azul project, a smaller LNG facility being built by Sempra, has also been delayed by a year, to mid-2026.

Even projects with less severe delays are experiencing teething problems. Plaquemines LNG, a large export project by Venture Global LNG Inc., is unlikely to begin shipping until January or February 2025, despite an initial target date in 2024.

"Significant LNG supply increases which could comfortably exceed demand are now expected in 2027, rather than during 2025 or 2026," Anne-Sophie Corbeau, an LNG expert at Columbia University's Center on Global Energy Policy, told Blas.

While a few LNG projects are expected to remain on schedule, the overall delays are creating a seller's market.

"What we're seeing now is a supply-constrained market," Anatol Feygin, chief commercial officer at Cheniere, told investors in August. Gregory Joffroy, head of LNG at TotalEnergies SE, echoed these sentiments in a statement earlier this month: "We see some LNG projects that were due to come onstream in the coming months have been delayed."

Despite the current tightness, the US and Qatar remain committed to significantly increasing their LNG production over the next few years. However, for Europe, facing a challenging winter in the meantime, this shift cannot come soon enough.