Global supplier: Drop in prices could threaten LNG stability

The chief executive of a global integrated energies company is warning of an imminent threat to the LNG industry’s stability.

Patrick Pouyanné, CEO of TotalEnergies, highlighted the market’s trajectory towards oversupply, which could lead to a drop in the price of LNG.

Pouyanné was speaking at Gastech 2025, an international conference and exhibition for the global energy sector in Milan from September 9-12.

His statement was taken up in the energy magazine for the local energy chamber, Energy Now.

Pouyanné said TotalEnergies is currently the largest exporter of US energy and plans to boost its US LNG output from its current ten million tonnes to 18 million tonnes.

He said with the US bringing on several new projects it could lead to an oversupply, which would reduce prices.

Pouyanné said while the drop in price may be good for customers, it could be a problem for producers.

"This could pose a challenge to both LNG producers and for countries like TT, where LNG exports are an important source of revenue," the Energy Chamber said in its release on September 15.

However, recent projections have shown that demand for LNG and natural gas overall will increase.

Natural gas demand is expected to increase 20 per cent by 2050, and the LNG market is expected to double by that same time.

Still, with the rise in demand comes a surge in supply.

The International Energy Agency said that the US, Qatar and Canada alone may add a combined 300 billion cubic metres (220.5 million tonnes) of additional LNG capacity through 2030.

The chamber’s report said the decline in prices raises significant considerations for TT, where short-term prices of energy commodities have a direct link to the revenue earned by the government.

It noted that the government has experienced high levels of LNG prices since the Russian invasion of Ukraine, with European and East Asian LNG import prices currently over US$11.00 per mm sf compared to the US Henry Hub benchmark price of under US$3.00 and because of the renegotiated Atlantic marketing arrangements, TT’s well-head gas prices reflect these high Asian and European LNG prices.

The chamber noted that a decrease in LNG prices could put a further strain on government revenue.

"This potential for declining LNG prices highlights the importance of a national policy where there are a range of difference export routes for our natural gas, rather than relying solely on LNG," the Chamber said.

"Maintaining a portfolio of different routes to monetise gas is an important strategic national policy consideration, underlining the importance of ensuring that there is a diversity of downstream gas processing facilities in the country, including petrochemicals such as methanol and ammonia.

"This means that there is a broader portfolio of export commodities and potentially provides some greater stability in export earnings and government revenue," the chamber said.