Global LNG demand set for steady growth
30 August 2024
The low density of natural gas makes it costlier to contain and transport compared to other fossil fuels such as coal or crude oil.
For more than a century after gas was recognised as a viable energy source, producers were unable to utilise the fundamental infrastructure that facilitated international oil trade – marine transportation.
Prior to the development of liquefied natural gas (LNG) technology, the transportation of gas was limited to movement by pipeline. The development of LNG revolutionised the manner in which gas is transported and consumed worldwide.
The first experimental shipment of LNG was made from Lake Charles in the US state of Louisiana to Canvey Island in the UK in 1958, aboard the vessel the Methane Pioneer. Since then, with improvements in technology and cost efficiencies, LNG has become an internationally traded commodity, the demand for which has risen through the years.
LNG production and transmission
LNG is natural gas that has been reduced to a liquid state by cooling it to a cryogenic temperature of -160 degrees Celsius. Natural gas is converted to a liquid in a liquefaction plant, or train.
Train sizes tend to be limited by the size of the available compressors. In the early years of development, train sizes had capacities of about 2 million tonnes a year (t/y), and a greenfield facility would often require three trains to be economically viable.
Improvements in compressor technology in this century have made it possible to design larger trains, to benefit from economies of scale. In the early 2000s, Qatar’s state-owned companies Qatargas and RasGas, in partnership with Western companies such as ExxonMobil and TotalEnergies (which was known as Total at the time), started operating trains with capacities of 7.8 million t/y.
When natural gas is in a liquid form, it takes up approximately one 600th of the space it would occupy as a vapour. Reducing its volume and its weight by half makes it easier and safer to transport across long distances on specially designed double-hull ships or vessels.
In the final stage of transmission, LNG is offloaded from a marine jetty to cryogenic storage tanks at the receiving terminal. It remains at -160 degrees Celsius during this process.
Benefits and applications
A slew of benefits and applications in various industries has fuelled the growth of LNG in the global economy.
LNG produces 40% less carbon dioxide than coal and 30% less than oil, therefore offering lower carbon emissions.
The LNG liquefaction process also releases very little nitrogen oxide, a harmful greenhouse gas, and sulphur dioxide, which can cause significant damage to terrestrial and atmospheric ecosystems.
With an energy density 600 times greater than natural gas, LNG can be used as an alternative fuel for sectors such as shipping. This helps to reduce the carbon footprint of industries that are slower to decarbonise.
On the socioeconomic front, LNG sales have facilitated the economic progress of producer nations, as witnessed in Australia, Qatar and Nigeria. Consumer countries also get access to a source of affordable and environmentally sustainable energy.
Separately, investments in LNG – in the form of LNG infrastructure building, as well as the expansion of production facilities – spur economic growth and help to stimulate job creation.
LNG is primarily used as a major source for electricity generation in powering industries, households and social infrastructure.
The chemicals industry is also one of the largest consumers of LNG, where it is mainly used for steam production and for heating, cracking and reforming units.
In the transport sector, meanwhile, LNG is one of the foremost sources of fuel, particularly for marine tankers and heavy surface vehicles, due to its high energy density compared to conventional fuels, coupled with its low emissions.
In addition, in food manufacturing, LNG is used as fuel for intense processes such as the steaming and drying of food produce.
Buoyant demand outlook
According to Shell’s LNG Outlook 2024, the global demand for LNG is estimated to rise by more than 50% by 2040, as industrial coal-to-gas switching gathers pace in China, and as South and Southeast Asian countries use more LNG to support their economic growth.
Global trade in LNG reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies of LNG constraining growth while maintaining prices and price volatility above historic averages.
Demand for natural gas has already peaked in some regions but continues to rise globally, with LNG demand expected to reach about 625-685 million t/y in 2040, according to the latest industry estimates.
“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” says Steve Hill, executive vice president for Shell Energy, in the company’s LNG Outlook 2024.
“With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkiye combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution.”
Over the following decade, declining domestic gas production in parts of South and Southeast Asia could drive a surge in demand for LNG as these economies increasingly need fuel for gas-fired power plants or industry. However, these countries will need to make significant investments in their gas import infrastructure, Shell said in the report.
The Shell LNG Outlook 2024 also notes that gas complements wind and solar power in countries with high levels of renewables in their power generation mix, providing short-term flexibility and long-term security of supply.
Three stages of growth
UK-based consultancy Wood Mackenzie, in its global gas strategic planning outlook, identifies three distinct phases of LNG market growth in the coming decade.
First, it says that continued market volatility will remain for the next couple of years as limited supply growth amplifies risk.
The pace of LNG supply growth and demand across Europe and Asia provide both upside and downside risks. Uncertainty over Russian gas and LNG exports further complicates the matter, making 2025 a potentially tumultuous year for supply, and therefore for prices.
This phase could be followed by a major wave of new supply, ushering in lower prices from 2026, Wood Mackenzie says in the report.
A muted demand response to lower prices across Asia would undoubtedly draw out the market imbalance. Conversely, supply risks cannot be ruled out. An anticipated escalation of Western sanctions on Russian LNG threatens to impact the overall supply growth scenario, increasing the potential for a stronger-for-longer market.
Beyond 2026, as LNG supply growth slows, prices will recover again before a new wave of LNG supply triggers another cycle of low prices in the early 2030s, Wood Mackenzie predicts.
Much will depend on long-term Asian demand growth. Booming power demand and a shift away from coal makes gas and renewables the obvious choice.
However, if LNG prices are too high, Asia’s most price-sensitive buyers could quickly return to coal.
On the upside, delays or cancellations to the expansion of Central Asian and Russian pipeline gas into China will push Chinese LNG demand higher for longer.
Region advances LNG projects with pace
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
-
-
-
Axens signs Egypt refining deal8 July 2026
-
Gulftainer commits to $2bn expansion plan8 July 2026
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Firms submit King Salman airport project prequalifications
8 July 2026
Register for MEED’s 14-day trial access
Saudi Arabia’s King Salman International Airport Development Company (KSIADC) received prequalification statements on 1 July from contractors for two new packages at King Salman International airport (KSIA) in Riyadh.
These include the construction of a permanent East-West corridor and landside access roads serving the North and South terminals.
The scope covers the construction of roads, bridges and tunnels.
The client is expected to float the tenders soon.
The latest development follows KSIADC's selection of three groups to deliver the Terminal 6 apron, taxiways and other airfield infrastructure at KSIA.
KSIADC, which is backed by Saudi sovereign wealth vehicle the Public Investment Fund, will initially deliver the project on an early contractor involvement basis.
In March, MEED exclusively reported that KSIADC had selected three groups for the construction of Terminal 6.
In November last year, MEED reported that KSIADC was targeting mid-2026 to award the contract for the construction of Terminal 6.
MEED reported in May 2025 that US firm Bechtel Corporation had been appointed as the delivery partner for the terminals at KSIA.
According to local media reports, KSIADC’s acting CEO, Marco Mejia, said the project developer has completed the project’s masterplan.
The reports added that Terminal 6 will boost the airport’s capacity by 40 million passengers.
The project is expected to be delivered before the start of Expo 2030 Riyadh.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17588533/main.jpg -
WEBINAR: Saudi Giga Projects: Market Update for Q3 2026
8 July 2026
Webinar: Saudi Giga Projects: Market Update for Q3 2026
Tuesday 21 July 2026 | 11:00 AM GST | Register now
Agenda:
- Saudi projects market outlook and giga projects update
- 2026 contract awards, project activity and market performance
- Giga project reprioritisation, funding allocation and delivery progress
- Key project announcements, milestones and market developments to watch
- Major contracts awarded across construction, infrastructure and utilities
- Upcoming tenders and contract award opportunities over the next 6–12 months
- Geopolitical risks and their impact on project execution and investment
- Progress across NEOM, The Red Sea, Diriyah, Qiddiya and New Murabba
- Major non-giga project opportunities and growth sectors across Saudi Arabia
- Short-, medium- and long-term outlook for the Saudi projects market
- Audience Q&A
Hosted by: Yasir Iqbal, MEED's construction editor
https://image.digitalinsightresearch.in/uploads/NewsArticle/17588750/main.jpg -
Genel Energy buys Egypt-focused oil company for $360m
8 July 2026
Register for MEED’s 14-day trial access
UK-listed Genel Energy has agreed to acquire Egypt-focused Capricorn Energy in a $360m all-cash deal.
Genel said the acquisition will combine its Kurdistan production base with Capricorn’s portfolio of Egyptian oil and gas assets.
The company also said the deal will allow it to obtain production in a country with a “well-established regulatory regime, stable contracts and attractive fiscal terms”.
Several approvals are still required before the acquisition can be finalised.
In a statement, Genel said: “Genel’s strategy is to build a business with resilient diversified cash flows that deliver sustainable value to shareholders.
“The Genel board and Genel management are resolute in their belief that this can best be achieved through strategic acquisitions, which add substantial high-quality producing assets to its existing portfolio.”
Genel’s existing oil and gas assets include its 25% non-operated working interest in the Tawke PSC in the Kurdistan Region of Iraq.
The company said this asset generated working interest production averaging 17,520 barrels a day (b/d) of oil in 2025 and had operating costs of around $4 a barrel.
The combined group is expected to hold reserves of 117 million barrels of oil equivalent and production of 41,003 b/d.
Capricorn is headquartered in Edinburgh and has been listed on the London Stock Exchange for more than 30 years.
Its core operations are in Egypt’s Western Desert region, where it holds onshore development and production assets.
In May 2025, Capricorn agreed with Egyptian General Petroleum Corporation to consolidate eight of its 50:50 jointly owned concessions into a single integrated licence with enhanced commercial terms. Capricorn announced in March 2026 that it had received formal parliamentary ratification of the agreement.
The deal has been announced at a time when Genel is seeing frequent disruption to operations at its assets in Iraqi Kurdistan.
Production was temporarily suspended at the Tawke field in February after the US and Israel attacked Iran, increasing security concerns in the wider region.
While the security situation is understood to have improved in the Iraqi Kurdistan region and many oil companies have resumed operations, there are now concerns that the Iraq-Turkiye Pipeline could be shut due to an agreement between the two countries expiring later this month.
If the pipeline does stop operations, it will negatively impact Genel as it is the main route through which the company’s Iraqi oil is exported.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17587599/main.jpg -
Axens signs Egypt refining deal
8 July 2026
Register for MEED’s 14-day trial access
France’s Axens has signed a long-term agreement with the Egyptian Refining Company (ERC) that covers product supply, digital transformation and refinery performance optimisation.
ERC operates Egypt’s $4.4bn Mostorod refinery, which was inaugurated in September 2020.
In a statement about the deal, Axens said that it will “leverage its comprehensive and integrated portfolio of technologies, equipment, catalysts and services to support ERC’s operational, economic and sustainability objectives”.
It added: “With its end-to-end expertise across the entire refining value chain, Axens is uniquely positioned to support ERC from early-stage project studies through engineering, unit start-up, operational optimisation and long-term technical follow-up.
“This fully integrated approach will help ensure reliability, operational excellence and environmental performance across the refinery’s life cycle.”
Quentin Debuisschert, the chief executive and chairman of Axens, said: “This long-term agreement marks an important milestone in the relationship between Axens and ERC.
“It reflects our ability to support customers beyond technology licensing by delivering a fully integrated offering that combines all process and catalyst technologies a modern refinery needs, services, digital solutions, operational expertise and training.
“We are committed to supporting ERC’s ambitions in operational excellence, digital transformation and sustainability while helping maximise the long-term value and competitiveness of its assets.
“We are proud and motivated to continue supporting ERC in ensuring the economic and operational success of its refinery."
Mohamed Saad, the president of ERC, said: “ERC values its strong partnership with Axens and the confidence this agreement brings for the future.
"This collaboration will help us continue enhancing refinery performance, maximising operational efficiency and delivering high-quality products to support Egypt’s energy needs.”
The Mostorod refinery is located 10 kilometres north of Cairo and has the capacity to produce about 4.7 million tonnes of petroleum products annually.
It sells all of its output directly to the national oil company Egyptian General Petroleum Corporation under a 25-year agreement.
When the refinery was brought online and reached full capacity, it boosted Egypt’s capacity to produce diesel by 30% and increased gasoline production by 15%.
Operations started at the refinery in November 2019.
Qatar Petroleum is a stakeholder in the project. It owns 38.1% of the Arabian Refinery Company, which in turn owns 66.6% of ERC.
The Mostorod refinery mainly produces Euro 5 refined products, including diesel and jet fuel, which are intended for consumption primarily in Cairo and surrounding areas.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17587498/main.jpg -
Gulftainer commits to $2bn expansion plan
8 July 2026
Gulftainer has unveiled a $2bn strategy to transform from a ports and terminals operator into an integrated global trade infrastructure company, a long-horizon commitment made at a port that was struck three months ago and in a region where the shipping lanes it depends on are under renewed attack.
The strategy restructures the company around four platforms: container terminals and maritime gateways, inland logistics and multimodal transport, logistics parks and industrial ecosystems, and regional maritime services connecting strategic trade corridors.
At the centre of the strategy is Khorfakkan Port, the UAE's deepwater gateway on the Gulf of Oman. Expansion works will raise annual handling capacity from 3.5 million twenty-foot equivalent units (TEUs) to 5 million TEUs, a 43% uplift, with a long-term master plan targeting more than 10 million TEUs. Planned integration with Etihad Rail will turn the port into a fully multimodal gateway linking sea, road and rail.
The commitment comes despite the port's recent exposure to the conflict in the region. On 5 April, a fire broke out at Khorfakkan after debris fell on the facility following the interception of an unidentified object. In a post on X, the Sharjah media office said the incident injured four people, one Nepalese national seriously and three Pakistani nationals with minor to moderate injuries. The strait through which Khorfakkan-bound traffic passes has come under further attack in recent days, with merchant vessels struck near the Strait of Hormuz.
Inland, Al-Dhaid Logistics Park and Sajaa Logistics Park will together provide 2.3 million TEUs of annual inland capacity, extending Gulftainer's reach.
The company positions itself as a key enabler of the India-Middle East-Europe Economic Corridor and the UAE's role in China's Belt and Road Initiative, linking ports, shipping services, inland logistics networks and digital platforms across major global trade routes. The transformation follows nearly five decades of operation and is being implemented under the New Gulftainer strategy.
Gulftainer's partnership with the Sharjah Ports, Customs & Free Zones Authority underpins the Khorfakkan expansion. The port sits within an integrated maritime network spanning both the Arabian Gulf and the Gulf of Oman, offering shippers several routing options across the two waterways.
READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDFStress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.
Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
> AIRPORTS: Dubai and Riyadh reaffirm airport ambitions> INDUSTRY REPORT: Dubai eyes tourism sector recovery> DATA CENTRES: Big Tech falls short on data centre promise> LEADERSHIP: Aramco’s citizen developers accelerate digital changeTo see previous issues of MEED Business Review, please click herehttps://image.digitalinsightresearch.in/uploads/NewsArticle/17588407/main.jpg