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
  • Frontrunner emerges for Saudi sewage treatment project

    13 March 2026

     

    A consortium led by China’s Jiangsu United Water Technology has emerged as the frontrunner for a contract to build and upgrade two sewage treatment plants in Saudi Arabia, according to sources.

    The contract covers the North Western A Cluster Sewage Treatment Plants Package 11 (LTOM11), part of the next phase of National Water Company’s (NWC) long-term operations and maintenance (LTOM) sewage treatment programme.

    The consortium comprising United Water, Prosus Energy (UAE) and Armada Holding (Saudi Arabia) offered “the lowest tariff” for the project, sources told MEED.

    It is understood that Turkey’s Kuzu has made the next-lowest bid.

    The development, estimated to cost about $211m, will have a combined capacity of about 440,000 cubic metres a day (cm/d).

    In February, MEED exclusively reported that six bidders were competing for the contract.

    The other companies that have submitted proposals include:

    • Alkhorayef Water & Power Technologies (Saudi Arabia)
    • Civil Works Company (Saudi Arabia)
    • VA Tech Wabag (India)
    • Aguas de Valencia (Spain)

    LTOM11, also known as the North Western A Cluster, forms part of the second phase of NWC’s rehabilitation of sewage treatment plants programme.

    The scheme is being procured on an engineering, procurement and construction (EPC) basis with a long-term operations component.

    The main contract was tendered last year, with an award initially expected by the end of 2025.

    It is now understood that NWC is preparing to offer the main contract in the second quarter.

    As previously reported, Saudi Arabia’s NWC is also evaluating five bids for package 12 of its long-term operations and maintenance (LTOM12) sewage treatment programme.

    Known as the North Western B Cluster, LTOM12 forms part of the second phase of NWC’s rehabilitation of sewage treatment plants programme.

    In January, the same United Water-led consortium won the main contract for the Northern Cluster Sewage Treatment Plants Package 10 (LTOM10).

    That project includes the rehabilitation and operation of nine sewage treatment plants located across the Hail, Qassim, Al-Jouf and Northern Borders provinces

    NWC is also preparing to tender a contract for the construction of 10 sewage treatment plants as part of package 14 of the programme.

    The final details of the Eastern A Cluster (LTOM14) package are being finalised, with a tender likely to be issued in March or April, sources told MEED.

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

    Riyadh urges private sector to take greater role; Chemical players look to spend rationally; Economic uptick lends confidence to Cairo’s reforms.

    Distributed to senior decision-makers in the region and around the world, the March 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15968035/main.jpg
    Mark Dowdall
  • Medina tenders Sikkah Al-Hadid PPP project

    13 March 2026

    Saudi entities including Al-Madinah Regional Municipality, in collaboration with the Ministry of Municipalities & Housing and the National Centre for Privatisation & PPP (NCP), have floated a request for proposal (RFP) notice for the development of the Sikkah Al-Hadid project.

    The project will be procured through build-own-operate-transfer contracts with a 50-year duration, using a public-private partnership (PPP) model.

    The deadline for bid submission is 23 June.

    The project will be located to the west of Medina on an 84,657-square-metre (sq m) site. 

    It includes a four-storey medical centre with a capacity of up to 200 beds and a shopping mall offering retail, food and beverage, and other entertainment facilities.

    In January last year, NCP asked firms to express their interest and prequalify for a contract to develop two mixed-use developments in Medina, which included the Sikkah Al-Hadid project and the Dhul Hulaifah project.

    The Dhul Hulaifah project will be built on a 30,112 sq m site located six kilometres from the Prophet’s Mosque. 

    The development will consist of a four-star hotel integrated with retail and healthcare facilities.

    MEED previously reported that Saudi Arabia had announced a P&PPP pipeline comprising 200 projects across 16 sectors.

    This pipeline aims to attract local and international investors and ensure their readiness to participate in the schemes tendered to the market.

    The initiative comes as the kingdom strives to increase the attractiveness of its economy and raise the private sector’s contribution to GDP.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15968021/main.jpg
    Yasir Iqbal
  • Fuel storage facility attacked in Bahrain

    13 March 2026

    Register for MEED’s 14-day trial access 

    Fuel storage tanks at a facility on Bahrain’s Muharraq Island were targeted in an attack attributed to Iran, according to a statement from Bahrain’s Interior Ministry.

    The ministry put out an alert for people in surrounding neighbourhoods “to remain in their homes, close windows and ventilation openings, as a precautionary measure against possible exposure to smoke”.

    Videos of the incident, which took place on 12 March, showed a large fire emitting black smoke. The fire was later extinguished by teams of firefighters.

    Bahrain’s international airport is also located on Muharraq Island.

    Iran has been firing missiles at a range of targets in nearby countries since it was attacked by the US and Israel on 28 February.

    On 11 March, a similar attack on fuel storage tanks in Oman led to the closure of some terminals at the port of Salalah.

    Footage recorded by vessel crews at the port, which is the largest in the country, showed explosions and a large fire.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15963333/main.png
    Wil Crisp
  • Bahrain contacts engineering companies over Sitra refinery damage

    13 March 2026

    Register for MEED’s 14-day trial access 

    Bahrain’s national oil and gas company Bapco Energies is in touch with international engineering companies about damage done to the Sitra refinery by Iranian strikes, according to industry sources.

    In a statement on 9 March, Bapco Energies said its decision to issue the force majeure notice followed “the recent attack on its refinery complex”, without providing details.

    Bapco Energies is yet to share full details about the extent of the damage caused to the refinery, sources said.

    One source said: “Bapco has been corresponding with several companies with regard to the damage. It is being careful not to share confidential information, but it has reached out.”

    Prior to Bapco’s 9 March statement, the Sitra refinery was hit by a strike earlier in the day.

    That strike on the Sitra refinery was the second strike on the complex in days.

    Iranian missiles hit the facility on 5 March, resulting in parts of the refinery being engulfed in flames.

    Iran has been firing missiles at a range of targets in nearby countries since it was attacked by the US and Israel on 28 February.

    In November last year, MEED reported that Bapco Energies was in the final stages of ramping up volumes processed by new units that were installed as part of the Bapco Modernisation Programme (BMP).

    The project at the Sitra refinery in Bahrain is estimated to have been worth $7bn and was inaugurated by Bahrain’s King Hamad Bin Isa Al-Khalifa in December 2024.

    At the time, the companies involved in the engineering, procurement and construction (EPC) contract for the project were still working on the site to assist with efforts to increase volumes.

    Bapco Energies awarded the main $4.2bn contract to perform EPC works on the BMP to a consortium led by France’s Technip Energies in February 2018.

    The consortium also included Spain’s Tecnicas Reunidas and South Korea’s Samsung E&A.

    Technip Energies also performed the project’s front-end engineering and design work. US oil and gas producer Chevron acted as a consultant on the BMP, while Australia-based Worley was the project management consultant.

    In March 2024, after a series of setbacks and delays, France’s Total Energies was brought in to support Bapco in “optimising” the project.

    The BMP is central to Bahrain’s Vision 2030 economic development strategy, and Bapco has said that it is crucial to boosting the country’s long-term downstream potential.

    The BMP was originally expected to reach mechanical completion in 2023, with operations set to begin in 2024.

    The core objective of the BMP was to upgrade the Sitra refinery – Bahrain’s only oil refining asset, which is 90 years old.

    One of the key units to be built as part of the BMP was a residual hydrocracking unit (RHCU) powered by technology licensed from US-based Chevron Lummus Global. The BMP team has built a two-train RHCU with a capacity of 65,000 barrels a day.

    The Sitra refinery includes seven crude distillation units (CDUs) and vacuum distillation units (VDUs) as part of the BMP.

    The new 225,000 b/d integrated crude and vacuum unit replaced CDUs 1, 2 and 3 and VDUs 1 and 3, which had served Bapco Energies for over 80 years.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15963329/main.jpg
    Wil Crisp
  • Italian consultant wins Egypt battery storage contract

    13 March 2026

    Italy-headquartered consultancy Rina has announced its appointment as owner’s engineer for the 1 gigawatt-hour Nefertiti battery energy storage system (bess) project in Egypt.

    The project is being developed by Dubai-based firm Amea Power and is located in the Benban Photovoltaic Industrial Park in Aswan.

    The scheme will deploy a 500MW/1,000 megawatt-hour (MWh) utility-scale bess, making it the largest independent energy storage project in Africa.

    In March, a group comprising China Energy Engineering International Group, Zhejiang Thermal Power Construction and Southwest Electric Power Design & Research Institute was appointed as the main engineering, procurement and construction contractor.

    The $250m project also includes the construction of a 220kV substation, upgrades to an adjacent substation and development of grid network connection infrastructure.

    Under the owner’s engineer scope, Rina will deliver engineering design review, construction monitoring and commissioning support. The company will also undertake performance verification.

    Egypt’s utilities sector had its strongest year in over a decade in 2025, hitting $5bn in contract awards for the first time since 2015. 

    Last July, Amea Power commissioned Egypt’s first-ever utility-scale bess.

    The 300MWh project had previously reached financial close in June.

    The bess project is an extension of Amea Power’s operational 500MW solar photovoltaic plant in Aswan Governorate, which was commissioned in December 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15954234/main.jpg
    Mark Dowdall