The Liquefied Natural Gas Market is estimated to be valued at USD 11.43 billion in 2024, growing at a CAGR of 9.1% over the forecast period (2024-2031). With rising global energy demand and increasing LNG production from new liquefaction facilities, the liquefied natural gas market is expected to grow substantially. Furthermore, LNG is gaining popularity as a cleaner alternative to petroleum and coal and its usage is increasing in the power generation and transportation sectors.
Market Dynamics:
The liquefied natural gas market is driven by two key factors - rising global energy demand and increasing LNG production. The world energy demand has been rising steadily over the past few decades due to increasing industrialization and growing population. As economies develop, their energy consumption also grows to meet the needs of the industrial, commercial, and residential sectors. This rising energy demand is expected to primarily drive the liquefied natural gas market growth during the forecast period. At the same time, major LNG producers are developing new liquefaction facilities to boost production levels and cater to the growing demand. For example, the U.S. has emerged as a leading LNG exporter in recent years with new facilities coming online. Australia and Africa are also ramping up their LNG export capacity. This increasing LNG production from key regions will ensure adequate supply availability and support market growth.
Increasing Demand for Cleaner Fuel is Driving the LNG Market Growth
The demand for cleaner and more environment-friendly fuels is growing significantly across the world. Natural gas produces around 30% lesser carbon emissions as compared to coal and other liquid fuels when combusted. Many countries and industries are switching to natural gas to reduce their carbon footprint and comply with stringent emission norms. Liquefied natural gas (LNG) helps to transport natural gas over long distances via ships, making it accessible to locations without pipeline connections. Countries without indigenous natural gas reserves are increasingly importing LNG to fuel their power plants and other industrial needs. For example, Japan, South Korea and several European nations have increased their LNG imports manifolds in the last decade as they move away from coal and nuclear power. This growing demand for cleaner fuel is the primary driver propelling the global LNG market.
Increasing Gas-based Power Generation is Another Major Market Driver
With worldwide focus growing on phasing out coal and nuclear energy owing to environmental and safety concerns, natural gas has emerged as a bridging fuel in the transition to renewable energy sources. Gas power plants are more flexible and quicker to build compared to other non-renewable options. Several countries are rapidly increasing their domestic gas-fired power generation capacity, which is creating strong demand for LNG supplies. In regions with weak transmission grids, LNG-fueled decentralized power plants also help enhance grid reliability. Gas generators act as a base load as well as peaking power sources, supporting intermittent renewable power injection into the grid. This increasing reliance on gas-based electricity production worldwide is another key factor augmenting the LNG trade.
Over-supply Situation Acts as a Market Restraint
The global LNG market is currently experiencing an imbalance between supply and demand, with supplies outstripping consumption levels. Several new LNG projects came online in the last 5 years across North America, Australia, Russia and other regions, leading to an oversupply scenario. This overhang is putting downward pressure on LNG spot prices, reducing margins for producers. It is also discouraging new investment decisions in the short term. If the supply glut persists, it can restrain the potential growth of the LNG market. Producers need to closely match new liquefaction capacities with rising demand to maintain a balanced market.
Volatile Oil Prices Weaken the LNG Demand
There is a strong price correlation between oil and LNG markets since oil-indexed long-term contracts constitute the bulk of trade volumes. When international oil prices drop sharply, the indexed gas prices also decline, making LNG less competitive compared to alternatives like coal and fuel oil. This demand substitution effect was prominent during the 2015-16 commodity price crash. Lower gas prices also reduce incentives for long-term portfolio customers to fully utilize their contracted LNG volumes. Prolonged oil price volatility, if not managed well through contract renegotiations, can dampen the attractiveness of gas versus competing fuels and act as a restraint on LNG off-take.
Growing Infrastructure Investments Present Huge Market Opportunities
Trillions of dollars are being invested globally by governments and private players to rapidly expand LNG import and export infrastructure like terminals, carriers, storage facilities and cross-country pipelines. For example, China has earmarked over $150 billion for LNG infrastructure by 2030. Similarly, nations like India, Pakistan, and Bangladesh are developing multiple receiving terminals to step up gas consumption. On the supply side, countries in Russia, Canada, and Mozambique are developing large liquefaction projects to capitalize on the Asian demand pivot. These massive capex outlays portend great business prospects for EPC contractors, equipment manufacturers, logistic firms and service providers catering to the LNG value chain.
Increasing Interest in Small-scale Liquefaction Units is a Key Growth Avenue
While large liquefaction trains capturing economies of scale remain the industry standard, there is rising focus on modular small-scale liquefaction technologies suitable for isolated and distributed applications. These include floating liquefaction units (FLNG), onshore small and mid-scale LNG (SLNG) plants and specialized marine cargo containers housing liquefaction modules. Countries and regions with limited pipeline access but abundant local gas resources can economically monetize via small unit exports. It also enables new applications like fuelling LNG ships and bunkering. Major technology firms are aggressively developing smaller liquefaction solutions, opening up large untapped markets and multi-billion-dollar business prospects.
Link - https://www.coherentmarketinsights.com/market-insight/liquefied-natural-gas-market-985
Key Developments
- Endress+Hauser USA's decision to enhance its liquefied natural gas (LNG) initiative in 2024 is a significant step towards expanding their presence and capabilities in the LNG sector. By focusing on strengthening its LNG initiative, Endress+Hauser USA aims to capitalize on the growing demand for LNG and position itself as a key player in this market. This strategic move demonstrates its commitment to innovation, technology, and meeting the evolving needs of the industry.
- In May 2022, ExxonMobil and Pertamina, the state-owned energy company for Indonesia, signed a joint study agreement to assess the potential of the large-scale implementation of lower-emissions technologies including carbon capture, storage, and hydrogen production. The agreement aims to advance carbon capture and storage in Indonesia that have taken place since the companies signed a memorandum of understanding at COP26 in Glasgow, Scotland. COP26 is the 2021 United Nations Climate Change Conference, more commonly referred to as COP26, was the 26th United Nations Climate Change conference, held at the SEC Centre in Glasgow.
- In May 2022, Venture Global LNG signed two long-term deals to supply liquefied natural gas (LNG) to ExxonMobil LNG Asia Pacific (EMLAP), a registered business name of ExxonMobil Asia Pacific, and an affiliate of the U.S.-based company, ExxonMobil. Under the new sales and purchase agreements (SPAs), Venture Global will supply two million tons per annum (Mtpa) of LNG to ExxonMobil LNG Asia Pacific. The ExxonMobil affiliate will receive 1Mtpa from the Plaquemines LNG facility and 1Mtpa from the CP2 LNG facility.
- In April 2021, Total Energies made natural gas, the least polluting of all fossil fuels, a cornerstone of its strategy in order to meet the growing global demand for energy while helping to mitigate climate change. In particular, Total Energies is focusing on developing new cooling technologies for Liquefied Natural Gas (LNG). With the help of this technology, LNG can be easily transported and delivered as closely as possible to the consumer markets
Key Players
Asahi Kasei Corporation, Ascend Performance Materials, BASF SE, Invista, Lanxess Ag, PetroChina Liaoyang Petrochemical, Radici Group, Rhodia, Shandong Haili Chemical Industry Company Ltd., Shandong Hongye Chemical Company, Ltd, Shell Global, Exxon Mobil Corporation, Equinor ASA, Eni SpA, Conoco Philips, Chevron Corporation, Cheniere Energy, BP Plc, Qatargas, and Cheniere Energy.
