Multibillion-dollar gas projects at risk as fossil fuel market set for collapse

A multibillion-dollar set of gas projects around the world could be at risk due to the collapse of the fossil fuel markets, said a report by Global Energy Monitor.

The study found that spending on new gas terminals needed to ship super-chilled liquified natural gas (LNG) on seaborne tankers has more than doubled in the past year, from $82.8bn to $196.1bn.

This could mean that these projects are abandoned due to the rising costs and the glut of fossil fuel supply which may eventually lead to the collapse of the market. Add to that the fact that renewable energy projects are becoming cheaper and more popular among both energy companies and governments.

The global market price of LNG had already tumbled to record lows before the coronavirus outbreak but had since fallen further as lockdown measures triggered a dramatic fall in demand.

Ted Nace, the executive director of Global Energy Monitor, said: “LNG’s problems won’t magically disappear with the end of the pandemic. In the power sector, modelling shows that renewable packages are already outcompeting imported gas in South Korea. And every year that goes by, renewables get more competitive.”

Greig Aitken, a research analyst at Global Energy Monitor, said LNG was “once considered a safe bet” for investors but is now “beset with problems” because of an oversupply of gas in the market and waning interest in fossil fuels.