Liquefied Natural Gas Market: Technological Innovations, Emerging Trends, and Revenue Growth.

Liquefied Natural Gas Market: Technological Innovations, Emerging Trends, and Revenue Growth.

The Liquefied Natural Gas Market is estimated for 2024 for the forecast period 2024-2031, as highlighted in a new report published by Coherent Market Insights.

Market Overview:

Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. LNG takes up about 1/600th the volume of natural gas in the gaseous state. This process makes LNG cost-effective to transport over long distances where pipelines do not exist.

Market Dynamics:

The global Liquefied natural gas market is expected to witness significant growth over the forecast period, owing to rising number of LNG import terminals across various regions and increasing government focus on emerging natural gas-based economy. Between 2024-2031, over 120 new LNG import terminals are expected to come online, predominantly in Asia Pacific, Middle East, and North America. This rise in import infrastructure will boost the demand for LNG imports during the forecast period. Additionally, various governments are undertaking initiatives to promote usage of natural gas as a cleaner fossil fuel to meet their climate change commitments. Such initiatives are also expected to propel the LNG market growth during the forecast period.

Two Major Market Drivers Pushing Demand for Liquefied Natural Gas

Increased Demand for Cleaner Energy Sources

With growing concerns over pollution and climate change, many countries are looking to transition away from coal and toward cleaner burning natural gas and renewable energy sources. Liquefied natural gas produces around 30% less carbon dioxide emissions than coal when used for power generation, making it an appealing transition fuel as the world moves toward cleaner energy. Many countries in Asia and Europe that were heavily reliant on coal are building new LNG import facilities and power plants running on natural gas to reduce air pollution in major cities. The increased environmental regulations and carbon reduction targets set by various governments are driving strong long term demand growth for LNG.

Rising Natural Gas Production and New Export Terminals in Western Markets

The development of shale gas resources and new offshore natural gas fields in North America has vastly increased natural gas production in countries like the United States and Canada in recent years. WithNorth American domestic consumption stable or declining in some cases, major producers are looking to export surplus production overseas as LNG. Countries like the U.S. and Canada are investing billions to build new export terminals on their coasts that will allow them to export LNG globally for the first time. This is expected to flood the global market with new supply and bring down prices, further fueling demand growth among importing countries in the coming decades.

Over Supplied Markets Pose A Restrain

Overcapacity Concerns Due to Rising LNG Supply

While additional LNG volumes from North America and other new suppliers will meet some of the growing demand, there are concerns that the market could see a supply glut if too many proposed export projects proceed as planned in the coming years. Several forecasters point out that LNG supply is slated to rise much faster than demand growth post-2025. This could potentially lead to oversupply and put downward pressure on prices unless new demand can be found. Sellers may need to delay or cancel some capital intensive projects if supply starts to exceed consumption. Overcapacity fears could dampen investment in new facilities by buyers and sellers alike in the short to medium term.

A Key Opportunity on the Horizon

Potential for LNG to Displace Coal in Power Generation in Asia

While natural gas has grown in popularity for power generation in several European economies that were heavily reliant on coal, coal still dominates the power mix in large Asian economies like China and India. As these populous nations look to curb deadly air pollution levels in heavy smog affected cities, there is a major opportunity for LNG to displace a significant portion of coal burning in power plants. International energy companies are investing in new gas-fired plants and lobbying governments across Asia to adopt more gas in the energy mix over the long run. If successful, this switch could substantially drive future LNG demand growth in coming decades as Asia accounts for the majority of global coal consumption currently. Government policies will play a big role in determining how much of this opportunity can be realized.

Emerging Trend In the Global LNG Market

Rise of Smaller Scale LNG and New Markets

While large liquefaction plants, long distance pipelines and ocean going tankers have defined the global LNG trade until now—a new emerging trend is the rise of smaller scale LNG. Companies are developing low capital intensive solutions like floating storage and regasification units as well as truck and ship deliveries of LNG to access new niche markets that cannot justify large import facilities. This allows countries and regions with no natural gas pipelines or access to utilize LNG as a new source of energy even for small volume consumption. Small scale LNG is opening up new non-traditional markets and increasing geographical reach. If successfully commercialized, it could help further accelerate global LNG demand growth in coming years.