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The global LNG market is a complex and ever-evolving one, however it is expected to grow over the forecast period owing to the increasing demand for natural gas as a cleaner and more efficient source of energy, growing adoption of LNG as a transportation fuel, and government policies aimed at reducing dependence on fossil fuels and promoting the use of natural gas, severe winters and summers, increasing demand for goods and services due to economic growth and rising crude oil prices.
Additionally, the increasing availability of LNG from new projects and the expansion of LNG export facilities have also contributed to growth in the LNG market.
However, the growing focus on climate change mitigation, the need to reduce greenhouse gas emissions, increasing competition from alternate energy sources such as renewable sources, and geopolitical risks are some of the major restraints to the global LNG market growth.
Liquefied Natural Gas (LNG) or Natural Gas is clean, abundant, accessible, and a versatile source of energy with the capacity to substitute coal and deliver power to inaccessible places. The natural gas demand is increasing worldwide primarily because it has transformed to be more cost-competitive in a variety of end-use sectors such as power generation, industries, and transportation (including road, rail, and water), thus driving the global LNG market.
The global LNG market increased by almost four times in the last twenty years. The volume of natural gas processed into LNG increased from 324.9 billion cubic meters in 2012 to 542.4 billion cubic meters in 2022.
The global LNG market volume is expected to double in the next decade as natural gas is being touted as a key to the energy transition, decarbonization, and enhanced energy security.
The conditions of the LNG market have undergone significant transformation over the past few years, shifting from severe price lows during oversupply in the middle of 2020 to extreme price highs in 2021 as global LNG demand swiftly recovered from the outbreak of COVID-19.
Prices for spot LNG have broken all prior records in 2022, owing to the sanctions and supply disruptions following the Russia-Ukraine conflict which forced the European nations to seek alternative sources, primarily LNG. This surge in European demand created a global imbalance between supply and demand, pushing prices upwards.
Throughout 2023, the global natural gas market demonstrated consistent LNG demand growth, despite constrained new capacity enhancements and spot prices lower than the historical levels observed in 2022. The global demand for LNG reached an unprecedented high, totaling 401 million tons (mt) in 2023, marking a 2.8% year-on-year increase from the 390 mt recorded in 2022.
In 2023, the demand for seaborne liquefied natural gas (LNG) in Asia remained robust, primarily fueled by Chinese consumption, positioning the region as the primary destination for LNG cargoes. Asia received over 258 million tons, constituting 64% of the global demand. Notably, China emerged as the world's largest LNG importer, surpassing Japan, with a remarkable 13.7% increase in imports, reaching 72 million tons compared to 62.4 million tons in 2022.
The surge in China's gas demand in 2022 was attributed to weakened industrial sector demand amid COVID control measures and elevated spot LNG prices driven by heightened European interest in the super-chilled fuel. Consequently, China experienced a 20% decline in LNG demand to 63.4 million tons in 2022, down from 79.3 million tons in the preceding year.
By the end of March 2023, the worldwide liquefied natural gas trade linked 20 exporting markets to 48 markets equipped with importing infrastructure. The growing globalization of the LNG market has facilitated the redirection of substantial energy volumes within a few months.
The international LNG trade increased by 6.8% between the years 2021 and 2022, reaching a new all-time high of 401.5 MT. The notable increase of 25.4 MT was primarily propelled by a surge in LNG demand within Europe, compensating for the decline in pipeline flows from Russia. Despite facing several unexpected disruptions in LNG supply, the annual growth rate of 6.8% in LNG trade surpassed the 4.5% observed in 2021.
The substantial rise in liquefied natural gas (LNG) imports in 2022, was prominently led by Europe, experiencing the most significant annual growth of 50.4 million tonnes (MT) compared to 2021. Europe, grappling with the decline in Russian pipeline volumes, successfully imported 126.6 MT last year, securing its position as the second-largest LNG importing region globally. Meanwhile, Asia Pacific maintained its lead as the largest importer, bringing in a total of 160.9 MT of LNG in 2022, marking a 4.6 MT increase compared to the previous year.
In 2022, the Asia Pacific region maintained its status as the largest exporting region, reaching a total of 136.6 million tonnes (MT). This marked a notable increase of 5.2 MT compared to the previous year, highlighting its continued dominance in LNG exports. The Middle East secured the second position with an output of 96.5 MT, reflecting an increase of 3.9 MT. North America emerged as a significant player, exporting 80.5 MT in 2022, showcasing the most substantial growth of 10.5 MT compared to the preceding year.
The global LNG market report includes insights on the ongoing and upcoming LNG infrastructure development, covering LNG liquefaction plants, LNG regasification facilities and LNG carrier fleet.
LNG terminals are usually regulated by the government and the ministry of utilities. For example, in the US, the Federal Energy Regulatory Commission (FERC), under the Natural Gas Act, authorizes the site and construction of LNG terminals. Currently, FERC regulates 24 operational LNG import and LNG export terminals and about 5 LNG import terminals and 21 LNG export terminals are at the proposal or under construction stage. As the demand for LNG is growing amid various application scenarios, the LNG infrastructure market is expected to witness growth during the forecast period.
In 2022, a cumulative liquefaction capacity of 19.9 million tonnes per annum (MTPA) was added, elevating the global liquefaction capacity to 478.4 MTPA by the end of that year. The average global utilization rate for liquefaction facilities in 2022 increased to 89%, a significant uptick from the 80.4% observed in 2021. This surge in utilization was attributed to the heightened LNG imports in Europe, aimed at compensating for the substantial decrease in Russian pipeline gas volumes to the region.
(You can access a comprehensive list of both upcoming and announced LNG Liquification Plant Projects in the world, along with their current status, through our extensive Global LNG Projects Database)
The global LNG carrier market grew steadily in the last twenty years because of the rapid increase in liquefaction capacity. About 90% of the LNG carriers are less than 20 years old and the order book for these vessels remains strong during the forecast period.
As of the end of April 2023, the global liquefied natural gas (LNG) carrier fleet comprised 668 active vessels, including 45 Floating Storage and Regasification Units (FSRUs) and eight Floating Storage Units (FSUs). This figure reflects the delivery of 27 vessels in 2022 and an additional 11 vessels in the first four months of 2023. The fleet's growth, amounting to a 4% increase from 2021 to 2022, aligns with a comparable 2.7% growth in the number of LNG voyages.
This expansion is notably linked to Europe's strategic efforts to significantly boost LNG imports for energy security reasons. This initiative gained momentum following the commencement of the Russia-Ukraine conflict and the subsequent reduction in Russian gas pipeline flows to Europe.
Currently, Natural gas accounts for one-fourth of Europe's overall energy consumption. The power generation sector accounts for about 26% of that gas, while the industrial sector accounts for 23%. The rest of the gas is used to heat the buildings in the residential and commercial sector.
However, in 2023, there was a notable 7% decrease in natural gas demand in Europe, amounting to 35 billion cubic meters (bcm), marking the lowest level since 1995. The majority of this decline occurred within the first three quarters of the year, with gas consumption maintaining a trajectory just under the levels observed in 2022 during the fourth quarter. The primary contributor to this reduction, accounting for 75% of the decline, was the power sector. Factors such as diminished electricity demand, the ongoing growth of renewable energy sources, and enhanced nuclear availability collectively exerted pressure on gas-fired power generation during this period.
The disparity between Europe's liquefied natural gas (LNG) capacity and demand is expanding. Since the start of 2022, Europe has introduced six new LNG terminals. The region's LNG import capacity is poised to reach 406 billion cubic meters (bcm) by 2030. This represents a substantial rise of 143 bcm compared to the levels observed in 2021. Interestingly, this surge in LNG capacity is occurring in tandem with a forecasted decrease in gas consumption, expected to reach around 400 bcm. This shift is attributed to the continent's proactive implementation of gas demand reduction policies.
The Asia-Pacific region experienced a natural gas demand decline of 1.5% in 2022. However, the demand rebounded in 2023, registering an estimated growth of 2.5%. The upturn was particularly pronounced in the second half of 2023 and was primarily fuelled by increased demand in China, India, and select emerging markets in Asia.
In contrast, the major natural gas markets in the region, such as Japan and South Korea, continued to see subdued natural gas demand. This was attributed to the improved availability of nuclear energy, resulting in reduced reliance on gas-fired power plants in these established markets.
In 2023, North America witnessed a notable increase in natural gas consumption, growing by over 1%, equivalent to more than 10 billion cubic meters (bcm). This surge was primarily propelled by heightened gas burn in the region's power sector. Notably, in the United States, domestic natural gas output experienced a robust 4% growth, amounting to 40 bcm, reaching an unprecedented high of 1,065 bcm.
The substantial growth in domestic supply, coupled with mild winter conditions, exerted downward pressure on gas prices, resulting in a significant 60% decrease compared to 2022. Lower natural gas prices facilitated a shift from coal to gas in the power sector, contributing to a record-high share of natural gas in the U.S. power mix, reaching 42% in 2023.
The ample domestic gas supply not only supported increased domestic consumption but also enabled the United States to expand its liquefied natural gas (LNG) exports, experiencing a 10% growth. Consequently, in 2023, the United States emerged as the world's largest LNG supplier.
The market players in the global LNG market are looking to improve their capital efficiency, optimize the supply chain, develop downstream markets (including LNG infrastructure for small scale LNG) and take help of digital and advanced analytics to outperform in the rapidly changing LNG market landscape.
LNG market players are the natural gas producers, LNG producers, owners of the LNG terminals (both liquefaction and regasification plants) and LNG shipment operators. Some of the major players in the LNG market are Shell, Gazprom, ENI, Equinor, ConocoPhillips, Chevron, BP, Total, Exxon Mobil, CNPC, QatarEnergy (formerly Qatar Petroleum), Petronet LNG, Cheniere Energy, Inc.
Blackridge Research's Global LNG Market report provides comprehensive qualitative and quantitative analyses along with a deep insight into the current and future of the market.
The report analyses the annual trends of natural gas production, LNG production, global LNG imports and LNG exports, LNG terminals, LNG supply, natural gas futures contracts, long term contracts, LNG contracts; provides forecast market size (in terms of volume and value), capacity additions of LNG projects and investments into the sector; details the market's drivers and restraints; discusses growth challenges at various levels; provides supply chain analysis; lists profiles of major players; provides competitive market analysis including LNG and LNG Carriers market share; discusses various market-specific scenarios and much more.
The report covers detailed profiles of LNG markets in major countries across North America, South America, Asia-Pacific, Europe, the Middle East, and Africa regions. Each country's analysis covers the current market scenario, market drivers, government policies & regulations, and market outlook. In addition, market size, demand forecast, and growth rates will be provided for all regions.
Analysis of the Russia-Ukraine conflict impact on the global LNG industry is an integral part of the report, which helps companies navigate a rapidly changing market landscape.
1. Executive Summary
2. Research Scope and Methodology
3. Market Analysis
4. Industry Analysis
5. Regional Market Analysis
6. Key Company Profiles
7. Competitive Landscape
8. Conclusions and Recommendations
List of Tables & Figures
Abbreviations
Additional Notes
Disclaimer
Report - Global LNG Market Outlook to 2029.pdf
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