Global Natural Gas Demand is Increasing

Two years after the global energy turmoil of 2022-23, worldwide demand for natural gas is increasing at a more rapid rate, and global gas demand is expected to reach new all-time highs in 2024 and 2025, a new report indicates.

The International Energy Agency’s Global Gas Security Review 2024 found that global gas demand is forecast to increase by more than 2.5% in 2024 and 2025, with most of the increase coming from growing Asian markets and some rebound in European industry.

The report cautions that the energy markets remain sensitive due to tight supply and limited growth in liquefied natural gas (LNG) production and continuing geopolitical strife. The global energy crisis several years ago began with rising prices due to the economic rebound following pandemic lockdowns, and was exacerbated by Russia’s invasion of Ukraine and the cutoff of Russian natural gas supplies to Europe. Now, conflict in the Mideast is contributing to the global volatility in energy.

Growth in global LNG supply has been lagging, increasing by about 2%, compared to an average 8% growth rate from to 2016 to 2020. A number of countries without ample natural gas supplies depend on LNG imports to meet their energy needs. The U.S. has become one of the leading exporters of LNG, primarily to Europe, which had to replace the Russian gas supply after the invasion of Ukraine.

LNG is gas that is condensed into a liquid form by lowering its temperature to minus 260°F, a process called liquefaction, making it easier and more economical to store and transport, using special refrigerated tanks or specially-built ships.

Several large LNG projects are expected to being operation in 2025, which should increase supply growth, the IEA notes. While 75% of the liquefaction capacity approved in 2022 and 2023 from in the U.S., no additional projects have moved forward since a temporary pause of LNG project approvals in the U.S. If that is lifted, the momentum could quickly pick up.

The U.S. Energy Information Administration reported that North American’s LNG export capacity should more than double between 2024 and 2028 if projects now under construction come online.

While renewable forms of energy continue to make strides and become a bigger part of the energy mix, it is apparent that in the near term the use of LNG globally will be strong, with much of that supply coming from the U.S.