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Baker Hughes booked a record $5.6 billion of LNG equipment orders in 2023 and $3.5 billion in 2022.
The company booked only $700 million of LNG equipment orders so far in 2024, as near-term project FID sequencing was disrupted by the US moratorium on non-FTA LNG export approvals.
The orders include the Cedar LNG project in Canada.
In gas technology services, Baker Hughes also secured a multi-decade agreement for an LNG facility in the Middle East to provide extensive aftermarket services and digital solutions leveraging IET’s Center, Simonelli said during the Baker Hughes third-quarter earnings call on Wednesday.
Asked about order expectations during the call, Simonelli said that the company will come back in the fourth-quarter earnings call and give more specific guidance relative to 2025.
“I’d say though, we feel good about 2025, with most segments similar to 2024, showing slight growth,” he said.
“I think if you start off with the equipment side, we do expect the pace of LNG FIDs to pick up next year, again, assuming a positive resolution of the US LNG moratorium, as well as the significant international LNG projects that are accelerating pace,” he said.
LNG offtake contracting on track to hit record
Besides orders, Simonelli discussed LNG offtake contracting and the outlook for FIDs.
“For LNG, year-to-date offtake contracting has totaled 78 mtpa, which is on pace to exceed the record 84 mtpa achieved in 2022,” he said.
“This contracting strength supports our outlook for 100 mtpa of FIDs between 2024 and 2026,” he said.
“Age of gas”
The CEO also touched upon Baker Hughes’ long-held macro view of structurally growing energy demand,
“Between now and 2040, we expect global primary energy demand to grow by 10 percent, driven by population growth and increasing energy intensity across major developing countries,” he said.
“To put this in perspective, there are roughly eight billion people in the world today. One billion live in OECD (Organization for Economic Co-operation and Development) countries, with the other seven billion living in emerging economies,” he said.
According to the Energy Institute, a person in the developed world consumes, on average, three times the energy of a person who lives in emerging countries.
“Therefore, even a small increase in energy consumption per capita in the emerging world can have a sizeable impact on overall energy demand,” Simonelli said.
“While we forecast significant growth in renewables, we believe this increase in primary energy demand will need to be met by multiple sources. Ultimately, we expect renewables to fall short of meeting both growing demand and replacing hydrocarbons to decarbonize the existing energy system,” he said.
According to Simonelli, it will take an all-of-the-above strategy, focusing on the emissions and not the fuel source, to meet the increase in energy demand.
“In our view, natural gas is a clear winner. It is abundant, low-cost, and has lower emissions. This is the age of gas,” he said.
“By 2040, we expect natural gas demand to grow by almost 20 percent and global LNG demand to increase at an even faster rate of 75 percent,” he said.