Even as central banks have tightened the cost of money, the appetite for energy infrastructure shows no sign of retreat. Baker Hughes chairman Lorenzo Simonelli, speaking at the Gastech conference in Bangkok, observed that long-term supply contracts and the structural rise of AI-driven electricity demand are keeping major projects financially viable. The world, it seems, is not pausing to wait for cheaper credit when the forces shaping its energy future feel both urgent and permanent.
Baker Hughes sees no slowdown in energy projects despite higher borrowing costs
Energy demand is not going to slow down with AI and data centers
Mark
So Baker Hughes is saying that higher interest rates haven't slowed down energy projects. What's actually keeping the money flowing?
Mimi
Offtake agreements, mainly. When a customer signs a long-term contract to buy the energy—say, a data center committing to purchase power for ten years—that contract becomes collateral. Banks will lend against it even at higher rates because the cash flow is predictable.
Luke
But we should note that Simonelli is speaking from inside the industry. He has an incentive to say things are fine. Do we have independent confirmation that financing hasn't tightened?
Mimi
That's fair. The backlog number—$37 billion—is real and audited. That's orders already placed. But whether new projects are being greenlit at the same pace as before, we'd need to see more data.
Mark
He keeps talking about AI data centers as this new demand driver. How much of the energy demand he's describing is actually from AI versus, say, just normal industrial growth?
Mimi
He doesn't break it out precisely. He says AI is "increasingly important" and that it's "intrinsically linked" with energy supply. But he's not saying AI is 50 percent of demand or 10 percent. It's more of a directional claim.
Luke
Right. And the water consumption issue he mentions—he acknowledges it but doesn't engage with it. If regulators start restricting data center buildout because of water stress, that could change the demand picture he's painting.
Mark
What about the LNG capacity target—900 million tons by 2035? Is that a forecast or a requirement?
Mimi
It's Baker Hughes' estimate of what the market will need. Not a regulatory mandate. It's their view of where demand will be.
Luke
And it's convenient that their backlog includes a lot of LNG equipment. We should read this as their best professional judgment, but also as a company talking its own book.
Mark
Fair point. So the real question is whether this confidence holds if rates stay high or go higher.
Mimi
Exactly. Simonelli is saying the fundamentals are strong enough to absorb higher financing costs. But there's a ceiling somewhere. We just don't know where it is yet.
El Pulso
- Oil above $100 a barrel and Strait of Hormuz disruptions have rattled global energy markets, pushing borrowing costs higher at the very moment new infrastructure is most needed.
- AI data centers are emerging as a voracious and structurally permanent source of electricity demand, with some operators in power-strained Southeast Asia building their own generation capacity.
- Baker Hughes is repositioning natural gas not as a bridge to somewhere else, but as a destination fuel essential to the long-term global energy mix — a subtle but consequential rhetorical shift.
- A $37 billion backlog signals that energy companies and their financiers are absorbing higher financing costs rather than deferring investment, betting that structural demand will vindicate the capital.
- The company projects global LNG capacity must reach 900 million tons annually by 2035, a target that implies decades of sustained construction even as new liquefaction plants are already coming online.
Even as central banks have tightened the cost of money, the appetite for energy infrastructure shows no sign of retreat. Baker Hughes chairman Lorenzo Simonelli, speaking at the Gastech conference in Bangkok, observed that long-term supply contracts and the structural rise of AI-driven electricity demand are keeping major projects financially viable. The world, it seems, is not pausing to wait for cheaper credit when the forces shaping its energy future feel both urgent and permanent.
Baker Hughes is watching the global energy investment cycle with quiet confidence. At the annual Gastech conference in Bangkok, chairman and CEO Lorenzo Simonelli noted that despite elevated borrowing costs — a consequence of central bank tightening and inflation pressures amplified by Middle Eastern supply disruptions — major energy infrastructure projects are moving forward without hesitation. The reason, he argued, lies in two converging structural forces: long-term offtake agreements that give lenders the revenue certainty they need, and an unmistakable surge in electricity demand driven by the worldwide expansion of AI data centers.
The geopolitical backdrop adds complexity. Oil has climbed back above $100 a barrel following disruptions linked to the Iran conflict, and shipping restrictions through the Strait of Hormuz have threatened LNG flows from Qatar. Yet Simonelli suggested that high commodity prices, rather than discouraging investment, can actually accelerate it — strong margins today justify the capital expenditure required to bring new supply online tomorrow.
Baker Hughes has also quietly reframed its language around natural gas. The company no longer describes it as a transitional fuel bridging coal and renewables, but as a destination fuel — a permanent fixture in the global energy mix. Population growth, industrial expansion, and the relentless buildout of AI infrastructure are, in the company's view, structural rather than cyclical forces, and natural gas is positioned to serve all of them.
The company's $37 billion backlog — spanning gas infrastructure, LNG facilities, and data-center power equipment — reflects that conviction in concrete terms. Baker Hughes forecasts that global LNG capacity will need to reach 900 million tons per year by 2035, and it sees little risk of a lasting oversupply even as new liquefaction plants come online. For investors watching the energy services sector, that backlog is the clearest signal yet that the world intends to build its energy future regardless of what borrowing costs demand.
Baker Hughes, one of the world's largest energy services companies, is seeing no signs that the higher cost of borrowing is dampening investment in major energy infrastructure projects. The company's chairman and chief executive, Lorenzo Simonelli, made the observation while attending the Gastech conference in Bangkok, where energy executives and policymakers gather annually to discuss global gas markets and infrastructure.
Simonelli attributed the continued momentum to two converging forces: long-term contracts that lock in revenue for energy suppliers, and an unmistakable surge in electricity demand driven by the global expansion of artificial intelligence data centers. The bankability of these projects, he explained, rests on offtake agreements already signed and on the broader outlook for energy consumption. Even as central banks have raised interest rates to combat inflation, the underlying economics of energy infrastructure remain sound enough to justify the higher financing costs.
The timing of his comments is notable. Oil prices had recently climbed back above $100 a barrel following disruptions to Middle Eastern energy flows triggered by the Iran conflict. The same geopolitical tensions have roiled natural gas markets, with shipping restrictions through the Strait of Hormuz threatening liquefied natural gas supplies from Qatar, one of the world's largest LNG exporters. These supply shocks have added to inflation concerns and pushed borrowing costs higher across the economy. Yet Simonelli suggested that elevated prices themselves can become a catalyst for investment—high margins today justify the capital expenditure needed to bring new supply online tomorrow.
Baker Hughes does not expect this dynamic to reverse. The company forecasts that global LNG capacity will need to expand to 900 million tons per annum by 2035 to satisfy projected demand. It sees little risk of a prolonged glut even as new liquefaction plants come online. The reason, in Simonelli's view, is that energy demand is not a cyclical phenomenon that will fade when economic growth slows. Population growth, industrial expansion, and the relentless buildout of data centers for artificial intelligence applications are all structural drivers that will sustain energy consumption for years to come.
AI infrastructure is emerging as perhaps the most consequential new source of demand. Data centers consume enormous quantities of electricity and water, raising environmental concerns in some quarters. But Simonelli said Baker Hughes expects the expansion of these facilities to continue unabated, and the company is increasing its own manufacturing capacity to meet the surge in orders for equipment. In Southeast Asia, where grid infrastructure is strained, some data-center operators are turning to distributed and behind-the-meter power generation—essentially building their own power plants—a trend that plays directly to Baker Hughes' strengths.
Natural gas, Simonelli argued, will be central to powering this energy-intensive future. The company has reframed how it talks about the fuel, moving away from the familiar characterization of natural gas as a transition fuel—a bridge between coal and renewables—toward positioning it as a destination fuel essential to meeting long-term energy needs. This rhetorical shift reflects a genuine conviction that gas will remain a core component of the global energy mix for decades, not merely a temporary placeholder.
Baker Hughes' confidence in this outlook is reflected in its financial position. The company reported a backlog of just over $37 billion, encompassing orders for gas infrastructure, equipment for data-center power generation, and LNG facilities. That backlog represents the company's visibility into future revenue and is a key metric investors watch to gauge the health of the energy services sector. For Baker Hughes, the backlog suggests that despite macroeconomic headwinds and the higher cost of capital, energy companies and their financiers remain committed to building out the infrastructure the world will need in the coming decade.
Citas Notables
The bankability of projects rests on offtake agreements in place and the outlook for energy demand, with financing remaining important but not a barrier to investment.— Lorenzo Simonelli, Baker Hughes CEO
Natural gas is not a transition fuel; it is a destination fuel central to meeting long-term energy needs.— Lorenzo Simonelli, Baker Hughes CEO
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