BRG Energy Economic Horizons

LNG Supply Boom Launches a New Era for LNG Markets

The global liquefied natural gas (LNG) industry is entering a major supply expansion led by the United States and Qatar, with liquefaction capacity expected to grow nearly 40 percent by the early 2030s. While this surge is expanding the overall market, it is also accelerating LNG’s shift toward a more flexible and commoditized pricing structure. Much new capacity is already under construction, often contracted by aggregators and traders rather than end users, raising the risk of oversupply if demand does not keep pace. This could pressure prices, increase short-term trading, and possibly lead to US cargo cancellations. As the swing producer, US LNG will likely drive global prices, and major price indices will likely move in closer correlation. 

Therefore, the key question is: where will this new LNG be absorbed?

Closing the Books on Russian Gas

European Union (EU) energy secretaries gathered in Luxemburg on October 20 to discuss a legislative proposal for a ban on all energy imports (including natural gas) originating from Russia, to be phased in until January 2028. In a historic vote, member–states approved the ban, even if landlocked Hungary and Slovakia, which voted against the proposal, reportedly will be exempt. Lawmakers in the European Parliament are expected to adopt the law before the end of the year. While a delegation from Russia recently announced a memorandum of understanding (MoU) with China about possible construction of the Power of Siberia 2 pipeline, EU leaders are trying to end all energy imports from Russia—a cornerstone of European manufacturing, power generation, and heating and cooking for over half a century.

Evidently, important geopolitical questions are linked to Europe’s transition away from its historically leading energy supplier. But what about the market impacts of a ban on imports of natural gas from Russia? Not long ago, interruptions in the supply of natural gas could be felt dramatically (if unevenly) across the European continent. Today, Europe’s natural gas market is more integrated than ever, as are markets globally, due to maturation of the market for liquefied natural gas (LNG). EU offtakers have already significantly reduced imports from the Russian Federation following the second outbreak of the war in Ukraine and Gazprom’s decision to halt exports of natural gas to northwestern Europe.

Drastic market intervention by banning a specific source of supply can have profound and unexpected consequences. Our LNG Horizon model, which projects global gas prices, production, and flows across all regional markets and international LNG markets, offers four key insights.

As the global drive to reach net-zero emissions goals rapidly intensifies—through waves of new policy, investment, and innovation—it can be tempting and is common to think of the energy transition as a zero-sum game between winners and losers.

We see it everywhere: in the idea that China’s progress on solar panels and electric vehicles is America and Europe’s loss; that the Inflation Reduction Act’s domestic subsidies are Europe and Asia’s loss; that the sustained production of natural gas is a loss for renewable energy sources.

As business leaders around the world assess where they stand in their clean energy journeys, this issue of BRG’s ThinkSet magazine pushes past zero-sum thinking to help inform decision-making in the critical years to come.

Read other recent publications from BRG’s Energy & Climate practice below: