Last year was an unprecedented year for natural gas and liquefied-natural-gas (LNG) markets. Whereas natural gas demand declined by 3%, LNG demand proved to be more resilient and managed to grow 1%. Nevertheless, the LNG market was extremely volatile, with periods of extreme oversupply alternating with periods of extreme tightness during the year. According to global management consulting firm McKinsey, natural gas is set to become the strongest-growing fossil fuel, with demand expanding 0.9% per annum from 2020 to 2035. While that kind of growth is nothing to write home about, natural gas will be the only fossil fuel expected to grow beyond 2030, peaking in 2037 thanks to the strong clean energy momentum. From 2035 to 2050, demand is expected to decline modestly by 0.4% per annum due to hard-to-replace gas use in the chemical and industrial sectors as natural gas continues to replace coal in power generation.
Meanwhile, LNG is set for much stronger growth, with McKinsey predicting that domestic supply in key gas markets will be unable to keep up with demand growth. Global LNG demand is expected to grow 3.4% per annum to 2035, calling for some 100 million metric tons of additional capacity to meet both demand growth and replace decline from existing projects. LNG demand growth will slow markedly from 2035 to 2050 to just 0.5% per annum but still call for more than 200 million metric tons of new capacity by 2050.
That said, LNG markets are expected to be anything but calm, with leading LNG exports constantly jostling for market share. On one hand, Qatar will be looking to reassert its dominance against new LNG powerhouse, Australia, while the United States will be looking to close the gap with the market leaders.
Major liquefied natural gas exporting countries in 2019 (in billion cubic meters)
Here are the most dominant nations in the LNG market.
#1. Australia After years of playing second fiddle, Australia has finally managed to overtake Qatar as the biggest LNG exporter in the world.
In 2019, Australia shipped 77.5 million tonnes with an export value of $49 billion, an 11.4% Y/Y increase. Figures released by Australian energy consultancy EnergyQuest by the end of November showed that Australia’s LNG exports were running 1.2 million tonnes ahead of 2019 figures and remained on course to hit a new high of 78 million tonnes.
That’s a million tonnes more than rival Qatar, which shipped 77 million tonnes in 2020.
The surge by Australia follows a succession of massive LNG projects that have kicked off production over the past decade, including projects by global operators such as Royal Dutch Shell (NYSE: RDS.A) and Chevron (NYSE: CVX) as well as megaprojects by ASX-listed Woodside Petroleum (ASX: WPL) and Santos (ASX: STO).
Western Australia is the nation’s dominant LNG export region, accounting for 57% of…
Read More: The 3 Nations Vying For Global LNG Dominance