Global LNG Market Faces Oversupply Risks and Shifting Demand in 2025

 Singapore

The global liquefied natural gas (LNG) market is at a critical juncture in 2025, with a surge in supply capacity, evolving regional demand, and increasing focus on sustainability shaping its trajectory. As new export facilities come online, particularly in the U.S., the industry braces for a potential oversupply, while geopolitical tensions and energy transition policies add complexity. Here’s a detailed look at the key trends driving the LNG market this year.

Supply Surge Signals Oversupply Concerns

Global LNG supply capacity is set to expand significantly, with the Institute for Energy Economics and Financial Analysis (IEEFA) forecasting a rise to 666.5 million tonnes per annum (MTPA) by 2028, exceeding demand projections through 2050. In 2025, LNG trade grew by 2.4% to 411.24 million tonnes, connecting 22 exporting markets with 48 importing markets, according to the International Gas Union’s 2025 World LNG Report. The U.S. leads this growth, with a 53% increase in export capacity (6.0 billion cubic feet per day) expected by 2026, driven by new projects like Venture Global’s Plaquemines LNG facility. However, this supply boom raises concerns of a multiyear glut starting in 2026, potentially pushing LNG prices to their lowest levels since 2022.

Asia Drives Demand, Europe Diversifies

Asia remains the epicenter of LNG demand, with the Asia-Pacific region accounting for 138.91 MTPA of exports in 2024, up 4.10 MTPA from 2023. China and India posted strong growth in spot LNG imports in 2025, fueled by heatwaves, infrastructure expansions, and gas-for-power reliance, according to the IGU. China’s LNG market is projected to grow at a 16.1% CAGR, reaching $70 billion by 2030. In contrast, European LNG imports dropped 21.22 MTPA year-on-year to 100.07 MTPA in 2024, driven by high storage levels and sluggish demand, but a 23.6% import surge in H1 2025 reflects efforts to replace Russian gas ahead of the EU’s March 2025 re-export ban. This shift is boosting demand for U.S. and Qatari LNG.

Geopolitical Tensions Impact Trade Flows

Geopolitical risks are reshaping LNG trade dynamics. The EU’s planned halt of Russian LNG re-exports and the end of gas transit through Ukraine in January 2025 have reduced Russia’s European exports by 9.4% in Q2 2025, redirecting focus to China via the Power of Siberia pipelines. Tensions in the Strait of Hormuz, handling 21% of global LNG, pose risks to supply routes, particularly for Middle Eastern exporters like Qatar. U.S. sanctions on Russia’s Arctic LNG 2 project have delayed its full operation to 2026, tightening global supply in the short term but adding to long-term oversupply risks.

Energy Transition and Sustainability Efforts

The LNG industry is aligning with global sustainability goals, with natural gas positioned as a transitional fuel. Investments in carbon capture, utilization, and storage (CCUS) are growing, with projects like Chevron’s Gorgon facility in Australia capturing 4 million metric tons of CO2 annually. Companies like Cheniere Energy are integrating renewables, with 50 MW of solar power at its Corpus Christi LNG plant in 2025. However, only 43% of industry executives surveyed by Deloitte prioritize CCUS due to high costs and regulatory uncertainties. Methane emissions reduction is also a focus, with AI-driven monitoring cutting emissions by 5% at select facilities in 2024.

Technological Advancements Boost Efficiency

Technological innovation is enhancing LNG operations. Floating LNG (FLNG) platforms, such as those operated by Shell in Australia, are reducing onshore infrastructure costs and improving flexibility. AI and digital twins are optimizing liquefaction and regasification processes, with TotalEnergies reporting a 10% efficiency gain at its Qatari facilities in 2024. The global LNG carrier fleet grew to 831 ships in 2024, with 66 new vessels delivered, supporting expanded trade. Blockchain is also being adopted for transparent supply chain management, reducing transaction costs by 6%.

Petrochemical and Industrial Demand

LNG’s role in petrochemicals and industrial applications is growing, with natural gas liquids (NGLs) expected to drive 18–20% of global oil demand by 2040. Facilities like Saudi Aramco’s Jafurah gas project are increasing ethane production for petrochemicals, targeting 1 million metric tons annually by 2027. However, global supply chain disruptions and competition from low-cost producers challenge profitability. Digital technologies have reduced production costs by 7% at major LNG-linked petrochemical plants in 2024.

Industry Consolidation and Workforce Shifts

Mergers and acquisitions (M&A) are rising, with 70% of LNG companies planning deals in 2025 to access technology and markets, according to GlobalData. Workforce reductions continue, with 8,000 jobs cut globally in 2024–2025 due to automation and cost pressures. Retraining programs are transitioning 4,000 workers to renewable energy roles by 2027, aligning with energy transition goals. Companies like ExxonMobil are maintaining capital discipline, distributing $20 billion in dividends in 2024.

Outlook for 2025

The global LNG market in 2025 is poised for growth but faces challenges from a potential oversupply and geopolitical uncertainties. Asia’s demand surge, Europe’s diversification, and technological advancements offer opportunities, while sustainability efforts and infrastructure investments are critical for long-term competitiveness. As companies navigate these trends, their ability to balance supply dynamics and transition goals will shape the LNG market through 2030.