meed-logo

line1 line2 line3
SIGN IN / REGISTER

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

https://image.digitalinsightresearch.in/uploads/NewsArticle/12432749/main.gif
Indrajit Sen

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • PIF to work with Egypt’s TMG on Saudi real estate schemes

    11 June 2026

    Saudi Arabia’s Public Investment Fund (PIF) and Egyptian real estate conglomerate Talaat Moustafa Group (TMG) have signed a memorandum of understanding (MoU) to explore collaboration on mixed-use real estate projects across PIF-owned developments in Saudi Arabia.

    The non-binding agreement covers potential cooperation across the residential, commercial, hospitality and retail sectors, as well as integrated urban environments. PIF said the partnership would accelerate project delivery and value creation across its portfolio.

    TMG, which has nearly 55 years of experience developing large-scale integrated cities, communities and hospitality projects across Egypt, brings technical and managerial capacity to the collaboration. The company previously signed an agreement with Saudi Arabia’s National Housing Company (NHC) in early 2024 to develop more than 27,000 residential units at the Banan City project in Riyadh’s Al-Fursan suburb.

    The MoU also establishes a framework to attract additional investors to future project phases and is intended to expand private sector participation as investors, partners and suppliers.

    PIF said the agreement forms part of its broader strategy to diversify Saudi Arabia’s economy and develop its urban development and livability ecosystem – one of six strategic ecosystems under its 2026-30 strategy. That ecosystem spans housing, retail, office and community spaces and essential services.

    The MoU is subject to the satisfaction of certain conditions precedent and receipt of all necessary regulatory and internal approvals.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17181887/main.png
    Colin Foreman
  • Egypt signs $420m Gabal El-Zeit wind agreements

    10 June 2026

    Egypt has signed agreements worth $420m for the investment, operation and power purchase of the 580MW Gabal El-Zeit wind power complex in the Red Sea region.

    Gabal El-Zeit 1 has a capacity of 240MW, while Gabal El-Zeit 2 and 3 have capacities of 220MW and 120MW, respectively.

    The agreements were signed between Egypt’s New and Renewable Energy Authority (NREA), the Egyptian Electricity Transmission Company (EETC) and Dubai-based Alcazar Energy.

    Under the agreements, Alcazar Energy will invest in, operate and manage the farms through a project company established under Egyptian law.

    The company will be responsible for technical operations, maintenance and efficiency upgrades while maintaining a minimum capacity of 580MW throughout the contract period.

    The Egyptian Electricity Transmission Company will purchase the electricity generated by the plant.

    The agreements follow earlier efforts to privatise the Gabal El-Zeit wind complex, involving a deal with UK-headquartered private equity firm Actis.

    According to the Egyptian government, the project supports the country’s state ownership policy and national energy strategy, which aim to increase the share of renewable energy in the electricity mix to 45%.

    The Gabal El-Zeit area on Egypt’s Red Sea coast is one of the country’s most established wind power development zones. The latest Gabal El-Zeit wind farm was completed in 2014, according to MEED Projects data. Germany’s Siemens Gamesa was the main contractor. 

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17170360/main.jpg
    Mark Dowdall
  • Majid Al-Futtaim awards $545m Ghaf Woods contract to ECC

    10 June 2026

    Majid Al-Futtaim Properties has appointed Engineering Contracting Company (ECC) as the main contractor for the Capria East, Capria West and Maravelle Residences developments at its Ghaf Woods community in Dubai, in a deal valued at AED2bn ($545m).

    The contract covers the construction of one-, two- and three-bedroom apartments and duplex residences across the two Capria clusters.

    The award adds to a series of major construction contracts Majid Al-Futtaim has issued across its Dubai communities in recent years.

    In May, local contractor Al-Sahel Contracting was awarded a AED700m contract for the Distrikt development, also at Ghaf Woods.

    In 2024, Majid Al-Futtaim awarded AED3bn in contracts for its Tilal Al-Ghaf community, appointing Innovo Build to build 94 waterfront villas at Elysian Mansions and United Engineering Construction (Unec) to deliver 130 villas at the Alaya development.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17170744/main.jpg
    Colin Foreman
  • Saudi Arabia and Turkiye sign railway agreements

    10 June 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia and Turkiye have signed two memorandums of understanding (MoUs) to strengthen bilateral cooperation in the railway and logistics sectors, advancing Riyadh’s ambitions to become a global logistics hub.

    Transport and Logistics Services Minister Saleh Al-Jasser and Turkish Transport and Infrastructure Minister Abdulkadir Uraloglu signed the agreements at the ministry’s headquarters in Riyadh on 9 June, following ministerial talks held with a high-level Turkish delegation. Transport General Authority president Fawaz Al-Sahli and officials from the kingdom’s transport and logistics sector were also present.

    Agreement scope

    The first MoU covers logistics services and operations, including the exchange of expertise, policies and regulations. The second focuses on railway technologies, signalling and communication systems, railway digitalisation, human capacity development, the localisation of the railway industry and measures to reduce the sector’s environmental impact.

    More broadly, the agreements cover cooperation on railway standards and related innovations, the exchange of expertise on the design, operation and maintenance of rail projects, and engineering, infrastructure and safety standards.

    The two sides will also cooperate on research and development, with provision for joint workforce training through specialist railway academies.

    Riyadh said the agreements will help support its National Strategy for Transport and Logistics Services and Saudi Vision 2030, which seeks to position the kingdom as a logistics bridge connecting three continents.

    Turkish projects

    Turkish contractors have already established themselves as key players in the region’s rail sector. In 2012, Yapi Merkezi secured a $2.1bn contract for work on the Haramain high-speed rail network in Saudi Arabia, while Turkish firms Mapa and Limak are leading the ongoing civil works on Dubai’s $5.5bn Metro Blue Line project as part of a China Railway Rolling Stock Corporation (CRRC) consortium. Turkish consultancy Proyapi Muhendislik ve Musavirlik Anonim Sirketi has also won design contracts for the 111km Kuwait National Rail Road project.

    The agreements signed by Saudi Arabia and Turkiye may also give momentum to longstanding discussions around a rail corridor linking the GCC with Turkiye. The route, which has been discussed for years, has gained renewed impetus in recent months as the effective closure of the Strait of Hormuz has pushed regional governments to accelerate the development of overland trade alternatives.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17169958/main.gif
    Colin Foreman
  • Joint venture tenders Algeria field development contract

    10 June 2026

     

    Register for MEED’s 14-day trial access 

    Hassi Bir Rekaiz Group (GHBR), which operates Algeria’s Hassi Bir Rekaiz field, has issued a tender for phase 2A of the asset’s field development project.

    GHBR is a joint venture of Algeria’s national oil and gas company Sonatrach and Thailand’s national exploration and production company PTTEP.

    The scope of the contract focuses on the “provision of engineering and supervision services”, according to documents published by Sonatrach.

    The tender has been issued with a bid deadline of 16 June 2026.

    In May, GHBR signed a $1.1bn contract for phase two of the Hassi Bir Rekaiz development project.

    The contract was won by a consortium of Egypt’s Petrojet and Italian engineering and contracting company Arkad.

    Petrojet’s portion of the project was estimated to be worth around $600m, and Arkad’s portion was estimated to be worth $500m.

    The contract used the engineering, procurement, construction and commissioning model.

    The scope of the project contract is focused on the construction of a central processing facility (CPF) capable of processing crude oil and associated gas.

    It also includes developing off-plot pipelines, as well as related utilities and infrastructure.

    The CPF will have the capacity to process 32,000 barrels a day (b/d) and will be designed to support future expansions.

    The related infrastructure will include an extensive pipeline network spanning approximately 217 kilometres, as well as a road network.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17163750/main3325.jpg
    Wil Crisp