Economic Insights – Industry Analysis

In 2024, the liquefied natural gas (LNG) sector experienced minimal growth of 1.6%, marking the lowest growth rate since 2020. This has prompted a reevaluation of the underlying factors, especially given the high global demand for energy.

Wael Abdel-Moati, an expert in gas and hydrogen markets from Awabak, has identified key reasons for the sluggish growth in LNG trade:

• The limited number of new projects that commenced commercial production in 2024, including two notable initiatives in the Congo and Mexico, which together contribute an annual capacity of just 2 million tons.
• Western sanctions on new liquefaction projects in Russia, particularly the ICRECIC 2 project, have resulted in a loss of over 6 million tons from the global market due to its suspension.
• A sharp decrease in LNG exports from certain countries, driven by extreme summer heat waves in 2024, necessitated prioritization of domestic demand over exports.

Looking ahead to 2025, Abdel-Moati forecasts a supply increase of approximately 4% compared to 2024. This rise is attributed to new projects slated for operation in the United States, Canada, and Africa, with a more pronounced impact expected in the latter half of the year.

Trends in Arab LNG Exports

Arab nations’ LNG exports declined by about 3% in 2024 but maintained a stable market share at approximately 26.4% of total global exports. Abdel-Moati attributes this decrease to several factors:

• Egypt’s exports halted as of May 1, 2024, due to a governmental decision aimed at securing local market needs.
• Algeria witnessed an 11% drop in exports due to maintenance activities at some liquefaction stations, although it successfully bolstered pipeline exports to Europe, ranking second after Norway as a leading exporter.

Abdel-Moati anticipates that Arab exports will stabilize in 2025, showing only modest growth of up to 1%, with significant increases likely commencing in 2026 concurrent with the first phase of the North Field expansion project in Qatar.

Mauritania’s Emerging Role in Gas Markets

The introduction of liquefied gas production from the Great Turta-Hamim field positions Mauritania as a significant player in the global gas market. Abdel-Moati highlighted that this initiative represents a pivotal development for the country, enabling it to leverage its natural gas resources for export for the first time.

This project will facilitate the advancement of subsequent production phases in the Turtle-Hmeim project, ultimately aiming to capitalize on approximately 15 trillion cubic feet of recoverable reserves, thereby attracting investments focused on the country’s gas potential.

Mauritania’s strategic geographical positioning, with close proximity to European markets and minimal disruption to maritime navigation routes, is expected to enhance the region’s contributions to global LNG trade.

Impact of U.S. Policy Changes

In response to the suspended issuance of licenses for new liquefaction projects by the previous U.S. administration, Abdel-Moati outlined potential repercussions:

• A halt in final investment decisions for any new liquefaction projects within the United States.
• A 70% reduction in American companies’ activity related to long-term LNG sales contracts compared to 2023.
• Conversely, investment decisions have been made for four new projects in Canada, the UAE, and Oman. Arab LNG-exporting countries have taken the lead globally, securing around 16 new agreements totaling 23.4 million tons per year.

With the anticipated arrival of President Trump, Abdel-Moati expects renewed investment activity in pending liquefaction projects, potentially leading to a surge in long-term agreements for U.S. LNG from newly established initiatives.

He noted the European markets have lost approximately 15 billion cubic meters of gas annually as a consequence of the Ukraine crisis, equating to around 5% of total gas requirements and nearly 9% of imports overall. Slovakia and Austria have been particularly affected.

In an effort to compensate for these losses, European markets have begun hastening the drawdown of their gas inventories at unprecedented rates. As the current winter season concludes, significant reductions in stockpiles are expected, necessitating increased imports of LNG at elevated prices, thus imposing economic strain across Europe, especially given a lack of substantial market surplus.

The Hydrogen Market Outlook

Abdel-Moati reaffirmed the commitment of Arab countries to secure a prominent role in the emerging hydrogen market, aimed at enhancing their standing within global energy sectors.

In this context, various Arab nations have set ambitious targets to produce up to 8 million tons annually of low-carbon hydrogen by 2030, escalating to 27 million tons annually by 2040, aligning with projected global demand.

The landscape of hydrogen initiatives is evolving, with the total number of announced projects now at 127, reflecting the readiness to meet future demand.

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