LNG Investments to Soar by Over 50 Percent by 2029: Goldman Sachs
Goldman Sachs Research is forecasting a significant transformation in the global energy landscape, predicting that investments in liquefied natural gas (LNG) will surge by more than 50 percent by 2029. This growth is set against a backdrop of a rapidly evolving oil and gas industry, with LNG emerging as a dominant force in the future energy supply.
A Shift Towards Short-Cycle Projects
Michele Della Vigna, Head of Natural Resources Research in EMEA at Goldman Sachs, highlighted the industry’s pivot from long-term oil projects to more agile, short-cycle ventures. This shift is driven by the dual forces of an anticipated decline in long-term oil demand and an increasing global appetite for natural gas. Over the past four years, the industry’s capital expenditure has grown by 11 percent, but this trend is expected to level off to around four percent annually from 2023 to 2026.
“Oil investment growth is peaking,” Della Vigna noted, “and the industry is shifting towards short-cycle, short-life projects. These projects have reduced decline rates but also shortened the reserve life by 55 percent over the past decade to just 21 years.”
The Rise of LNG
LNG is positioned to play a crucial role in meeting global energy demands. Della Vigna emphasized that the U.S. is leading the charge in LNG capacity growth, which is anticipated to increase global LNG supply by 80 percent by 2030. This expansion is expected to alleviate the energy crises triggered by European sanctions on Russian gas following the invasion of Ukraine and to lower natural gas prices in Europe and Asia.
“Liquefied natural gas in the US is dominating future supply,” Della Vigna explained. “We’re projecting a 54 percent increase by 2029, driven primarily by shale gas. This positions the US as the world’s largest energy exporter and the biggest supplier of LNG to Europe.”
A Boost for American Energy Independence
This surge in LNG investments is not only a global game-changer but also a significant boon for American energy independence. As the U.S. ramps up its LNG capacity, it strengthens its position as a self-sufficient energy producer, less reliant on foreign oil and gas imports. This strategic growth in LNG production enhances national security by reducing the geopolitical risks associated with energy supply disruptions from volatile regions.
Moreover, the U.S.’s ability to export LNG on a large scale positions it as a key player in the global energy market, providing allies and trading partners with a stable and reliable source of natural gas. This export capability not only supports global energy stability but also brings substantial economic benefits back home. Increased LNG exports contribute to job creation, infrastructure development, and significant revenues for local economies, further solidifying the nation’s economic resilience.
Strengthening Economic and Energy Security
The drive towards energy independence through LNG investments also aligns with broader economic and environmental goals. By leveraging its abundant shale gas resources, the U.S. can reduce its carbon footprint by substituting higher-emission energy sources with cleaner-burning natural gas. This transition supports both domestic energy needs and global environmental commitments.
A Future Beyond Oil
As the industry transitions, Della Vigna noted that new U.S. shale projects would see a deceleration in production growth by 2027. Meanwhile, OPEC nations have a unique opportunity to expand their market share towards the end of the decade, contingent upon maintaining production discipline and capitalizing on the peaking of non-OPEC production this year.
“There is a strong opportunity for OPEC to gain market share towards the end of the decade,” Della Vigna stated. “But this assumes that OPEC maintains its current production discipline for the next few years.”
Conclusion
Goldman Sachs’ forecast underscores the significant shifts underway in the oil and gas industry. With a substantial increase in LNG investments and a strategic pivot towards short-cycle projects, the industry is poised to meet evolving global energy needs. This transformation marks a new era for energy production, with natural gas playing a pivotal role in ensuring stable and affordable energy supplies worldwide.
As the industry adapts to these changes, stakeholders can look forward to a dynamic and promising future, driven by innovation, strategic investments, and a commitment to meeting global energy demands sustainably. The U.S.’s leading role in LNG production not only secures its energy independence but also cements its position as a global energy leader.
