Global LNG Market Outlook - Size, Growth, Share, Trends and Forecast to 2028

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 demand swiftly recovered from the outbreak of COVID-19. Prices for spot LNG have broken all prior records, and because there will be few additions to the supply over the next few years, it is anticipated that prices will continue to be at or near record levels.

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 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 owing to economic growth and rising crude oil prices are some of the major factors driving the global LNG market. 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.

LNG Market Growth

The global LNG market increased by almost four times in the last twenty years. The volume of natural gas processed into LNG increased from 140.47 billion cubic meters in 2000 to 487.9 billion cubic meters in 2020. During the same period, the percentage of natural gas traded as LNG doubled. It increased from 5.85% in 2000 to 12.66% in 2020.

The global LNG market volume is expected to double in the next decade because natural gas is touted as a key to the energy transition, decarbonization, and enhanced energy security.

LNG Market in the Power Generation Sector

The power generation sector is moving away from coal (a fossil fuel with high carbon density) and adopting gas as the primary source of transition fuel. Many power plants are shifting to gas-fired power generation because natural gas (including regasified LNG) has a smaller carbon footprint, which helps countries across the world meet their Net Zero targets of 2050. On the other hand, the increasing price of coal, and the non-availability of other power generation sources at competitive prices, make gas an attractive choice for producing power, thereby increasing its demand in the sector.

Moreover, the conversion of existing coal-fired power plants into cogeneration plants, the rise in the number of combined heat and power plants, and the technological advancements in deploying CCUS (Carbon Capture, Utilization and Storage) for existing gas-fired power plants are expected to increase the demand for gas in the power generation sector.

According to the International Energy Agency, natural gas-fired power generation around the world climbed by about 3% in 2021, despite the fact that gas prices continued to rise throughout the second half of the year.

LNG Market in the Industrial Sector

Natural gas is utilized across the industrial sector in the capacity of a fuel for the heating of processes, in combined heat and power systems, and as a raw material (feedstock) for the production of chemicals, fertilizer, and hydrogen. The industrial sector was responsible for approximately 33% of total natural gas consumption in the United States in 2021, and natural gas was also the source of approximately 33% of the industrial sector's overall energy consumption in the United States.

Natural gas is expected to play a significant role in decarbonizing the world including the industrial sector. Energy-intensive industries such as iron, steel, paper, pharmaceutical, fertilizers and chemicals, in their attempt to reduce pollution and meet the targets set by regulatory bodies are increasingly adopting gas for their energy supply needs. It is estimated that more than 50% of new demand for liquefied natural gas will be from the industrial sector in the next two decades.

LNG Market in the Transportation Sector

The use of LNG as a low-emission and cost-effective mode of transportation is a popular choice all around the world. It sees widespread application in the realms of public, private, and heavy-duty trucking transportation, in addition to maritime and rail travel.

The demand for natural gas in the transportation sector is expected to grow by around 50 billion cubic meters by 2035, representing a compound annual growth rate of 2.2%. The regulations from various governments and the economic benefit derived by end-users using LNG as a fuel are expected to drive the LNG market in the sector.

In the road transport sub-sector, the regulations to reduce the emission of sulfur and nitrogen oxides are expected to drive the demand for LNG in the sub-sector. Currently, the use of LNG in road transport is limited to China, the United States, and a few European countries. However, various countries are looking to promote the use of LNG in road transport in the coming years.

In the marine sub-sector, targets set by the International Maritime Organization (IMO) to reduce the emissions from shipping by, at least, 50% by 2050 compared to 2008 levels, and carbon intensity by at least 40% by 2030, and 70% by 2050 is expected to drive the demand for LNG. To comply with these regulations, the LNG bunkering infrastructure is being developed on a large scale at major ports in the US, Sweden, Germany, Canada, China, Japan and others. Currently, the LNG usage in the marine sub-sector is increasing exponentially and is expected to at least double by 2030.

Small Scale LNG Market (ssLNG)

Small Scale LNG or ssLNG, is one of the niche markets within the global LNG industry with a high growth potential. Marine fuel bunkering, heavy road transportation and off-grid power generation are the major applications for ssLNG.

ssLNG is advantageous when it comes to addressing off-grid power generation in remote areas, which could be used to meet the requirements of residential and commercial customers. As LNG burns cleaner than other fossil fuels such as petroleum and coal, ssLNG is likely to gain greater traction as market and regulatory demands to transition to lower-carbon energy strengthen. In the same way that hydraulic fracturing (often known as 'fracking") altered the energy landscape in the United States, ssLNG has the potential to alter the function of gas in a number of important geographical areas and industry sectors.

LNG Pricing Analysis

The year 2021 was a significant one for the global LNG markets, as the market moved away from oversupplied conditions in the midst of the COVID-19 lockdowns and into a period of rapidly tightening market conditions, with resurgent demand rates exceeding supply additions. This caused the market to experience a period of rapid contraction. As a direct consequence of this, the price trends observed in 2019 and 2020 were almost completely reversed in 2021, which resulted in spot LNG prices reaching all-time highs.

In 2022, prices reached all-time highs as a direct result of Europe's initiative to switch from Russian gas (piped) to LNG. As a direct result of this, the demand for LNG in Asia decreased by 7%, marking the first yearly reduction in demand since 2015. As a result of unaffordable pricing, Asian demand was restrained, which led to a decline in utility earnings, the halting of scheduled import projects, and governments dealing with the ongoing risk of fuel shortages and power outages.

LNG Trade (imports and exports)

The international LNG trade increased by 4.5% between the years 2020 and 2021, reaching a new all-time high of 372.3 MT. A robust rebound following the pandemic led to an increase in LNG imports, despite the fact that the annual growth rate of 4.5% is still a long way off from the levels seen pre-COVID-19, which was at 13.0% in 2019.

LNG Imports

The Asia Pacific region continues to be the leading importing region, with a 41.8% share of global LNG imports last year, up from 41.3% in 2020. Imports increased in all markets within Asia Pacific except for Japan (-0.1 MT), Malaysia (-0.6 MT) and Singapore (-0.1 MT). India was the only market with lower imports in 2021 compared to 2020 (26.6 MT in 2020, 24.0 MT in 2021). The 9.8% decline in imports can be attributed to increased domestic gas production and high LNG spot prices, which led Indian consumers to import less LNG after the first quarter of 2021.

In Asia Pacific, several other countries and regions also significantly increased LNG imports in 2021, including, South Korea (+15.0%) and Chinese Taipei (+9.5%).

LNG Exports

In 2021, total global LNG exports reached 394.1 MT, an increase of around 23.0 MT (or 4 percent) from the previous year. The volume of liquefied natural gas (LNG) produced in the United States increased by 24.9 MT overall after a robust recovery in the wake of widespread cancellations of cargoes and lower utilization rates at liquefaction facilities. Not only was this the primary factor in the increase of the worldwide LNG supply, but it also provided security of supply because of the flexibility of destination in a market that was lacking in supply.

Asia-Pacific remained the leading export region in 2021, sending out a total of 131.2 MT, which was the same amount as the total exports in the previous year, 2020. The United States of America contributed to the highest regional gain in exports (+22.3 MT), which came from North America. Latin America experienced the greatest drop in regional exports over the course of the past year.

In 2021, 6.9 MTPA of liquefaction capacity became operational. Australia continued to be the world's leading exporter in 2021, shipping out 78.5 MT, an increase of 0.7 MT from the previous year, while Qatar shipped out 77.0 MT and captured a 21% market share of the exports market.

LNG Infrastructure

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.

LNG liquefaction plants

A total of 6.9 MTPA was added to the world's liquefaction capacity in 2021, bringing the total up to 459.9 MTPA at the end of the year. This represented a considerable slowdown in growth compared to the previous year. As a result of these additional capacity expansions, as of April 2022, the United States market has 86.1 MTPA of liquefaction capacity, making it the market with the second highest operational capacity worldwide. This places the United States of America in second place, behind Australia (87.6 MTPA), and in first place, ahead of Qatar (77.1 MTPA).

LNG Shipping

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.

The year 2021 saw the deployment of 57 carriers and four FSRUs, which contributed to a 9.9% increase in the size of the global fleet. The demand recovery from the COVID-19 pandemic, together with greater Asian demand that was catalysed by a colder winter at the beginning of the year, Chinese coal shortage, and better industrial demand towards the end of the year generated an 11.8% jump in the number of LNG journeys. This is in contrast to the year 2020, which only had little growth compared to the prior year.

Regional Insights

Europe

In June 2021, the European Parliament approved the 'Climate Law' which imposes legally binding commitments on the 27 EU Member States to reduce net EU emissions by 55% by 2030 from 1990 levels, and to achieve net-zero greenhouse gas emissions by 2050. This law is expected to push the companies in the power generation, industrial and transportation sectors to increasingly adopt the use of LNG.

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.

The available LNG infrastructure in Europe has the capacity to handle only about 45% of the regions' LNG demand. To address this, there are about 20 large-scale LNG import terminals being developed in the region.

The demand for LNG in Europe is expected to increase during the forecast period owing to the government regulations to phase out Russian gas use and meet emission reduction targets. For instance, Germany is committed to phase out nuclear power and coal-fired power by 2022 and 2038 respectively. So, to meet the energy demand, the country is investing in building LNG terminals in addition to the existing pipeline gas that the country receives.

Asia-Pacific

The Asia-Pacific region is the largest exporter as well as importer of LNG and is expected to remain the largest during the forecast period. The percentage of gas used for power generation is lowest in the region. With a target to reduce emissions, LNG demand will rise in the power generation and transportation sector especially in China and India along with other countries in Southeast Asia such as Thailand, the Philippines, Indonesia, and Malaysia.

LNG Market in China

China overtook Japan as the leading importer of LNG in 2021 after witnessing the largest gain in imported volumes. China went from importing 68.9 MT of LNG in 2020 to importing 79.3 MT of LNG in 2021, which is an increase of 15%. This was caused by a robust economic rebound as well as a surge in demand for gas in the sector of the economy that deals with the power generation.

However, Japan reclaimed the position of largest LNG importer in 2022, as China saw 19% drop in LNG imports due to persistent COVID-related lockdowns and high prices. As the lockdown restrictions are lifted, the demand is expected to rise again.

LNG Market in India

India is expected to emerge as one of the largest LNG importers in the coming years, because the Indian government targets to increase the share of natural gas in its energy mix from 6.5% today to 15% by 2030. This transition will require a lot of LNG infrastructure development.

In 2021, the Indian Ministry of Petroleum and Natural Gas released a draft LNG policy in order to establish an economy that is dependent on natural gas, the strategy advocates a number of different changes, such as increasing the use of LNG as a fuel for transportation and in the mining industry.

The goal of the policy is to raise the percentage of the Indian economy that is driven by natural gas from its present level of 6.3 percent to 15 percent by the year 2030. In order to make this more feasible, the strategy suggests the construction of LNG terminals with a capacity of 100 MMTPA by the year 2030, and terminals with a capacity of 100 MMTPA for regasification by the year 2040.

Companies and their Strategies

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 ssLNG) and take help of digital and advanced analytics to outperform in the rapidly changing LNG market landscape.

LNG Market Players

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.

Recent Developments

• Germany's Securing Energy for Europe (SEFE), formerly known as Gazprom Germania GmbH, has signed an agreement with the Hanseatic Energy Hub (HEH) terminal for regasification capacity in Stade, Germany in January 2023. This was done as part of an overarching goal to ensure the security of gas supply in Germany and throughout Europe
• Excelerate Energy, Inc. delivered its floating storage and regasification unit, the Exemplar, to Finland on December 28, 2022. The FSRU Exemplar, which is chartered to Gasgrid Finland Oy for a period of ten years, will provide flexible, reliable, and secure delivery of regasified LNG to Finland and other Baltic countries
• In Dec 2022, the U.S. government announced its commitment of exporting up to 353 Bcf of natural gas to the United Kingdom in 2023, as part of a strategic partnership aimed at strengthening energy security in Europe

Further details available in the Report

The publisher'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 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 Covid 19 impact on the global LNG market is an integral part of the report, which helps companies navigate a rapidly changing market landscape.


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