Wave of New LNG Supply Fuels Glut Fears

A new wave of LNG supply is set to hit the markets in the coming years as the two biggest exporters of the super-chilled fuel, the United States and Qatar, are preparing for a major boost to capacity.

Analysts say that tight LNG markets in the first half of this decade are likely to flip to a large surplus in the latter half of the 2020s.

However, there are a lot of uncertainties about demand in the medium term. If demand in Asia and Europe firms up and new power demand from data centers continues to surge, any oversupply could be absorbed quicker than previously thought, some market observers say.

Qatar, currently the world’s second-largest LNG exporter behind the U.S., has a huge expansion program underway to boost its export capacity by a whopping 85% from current levels by 2030.

QatarEnergy is proceeding with the North Field West project, after drilling appraisal wells at the world’s largest natural gas field, the North Field it shares with Iran, and finding “huge additional gas quantities” in the field.

The tiny Gulf nation has recently signed huge 27-year agreements for LNG supply to various countries in Europe and Asia, including Italy, France, the Netherlands, and China.

Qatar’s main competitor in these markets is the world’s biggest LNG exporter, the United States, which offers more flexibility in cargo deliveries, including the possibility for the buyer to resell the cargo.

The U.S. has new projects coming online this year and a new President is expected to strongly support the LNG industry and exports and possibly use LNG as a bargaining chip in tariff negotiations with trade partners.

Supply from America is growing with the start-up of Venture Global’s second facility, Plaquemines LNG, in Louisiana and the commissioning of Cheniere’s Corpus Christi Stage 3 project. Both Plaquemines LNG and Corpus Christi Stage 3 achieved first gas in late December 2024 and are expected to ramp up operations and exports throughout this year.

U.S. LNG exports are expected to jump by 15% in 2025, reaching almost 14 Bcf/d, thanks to higher export capacity with the Plaquemines LNG and Corpus Christi LNG Stage 3 plants, the EIA said in the Short-Term Energy Outlook (STEO) for December.

President-elect Donald Trump has said that Europe faces “tariffs all the way” if it does not buy more oil and gas from the United States.

The Trump administration could leverage LNG as a bargaining chip in trade negotiations with Europe, consultancy Rystad Energy said last month.

The new U.S. Administration is also expected to reverse the Biden pause on LNG permits, which could make U.S. developers more willing to take final investment decisions (FIDs) on new projects in the next few years.

Overall, North America’s LNG export capacity is on track to more than double between 2024 and 2028, from 11.4 billion cubic feet per day (Bcf/d) in 2023 to 24.4 Bcf/d in 2028, if projects currently under construction begin operations as planned, the U.S. EIA says.

Between 2024 and 2028, LNG export capacity is estimated to grow by 0.8 Bcf/d in Mexico, 2.5 Bcf/d in Canada, and 9.7 Bcf/d in the United States from a total of 10 new projects that are currently under construction in the three countries, according to the EIA.

The new U.S. projects include Plaquemines LNG and Corpus Christi LNG Stage III, which already achieved first gas in late December 2024.

“Trump’s push for deregulation and energy dominance could accelerate US LNG exports by fast-tracking permitting and infrastructure expansions, reinforcing US oil and gas production as well as LNG export growth,” said Emily McClain, Vice President, North America Gas & LNG Market Research at Rystad Energy.

Glut, Demand, and Prices

“The potential for oversupply in global markets could destabilize prices, especially if trade tensions with China reignite, which would have negative consequences for US producers and LNG developers. US LNG projects rely on securing consistent demand from China,” McClain noted.

“Regardless, Trump’s energy agenda in 2025 is likely to reshape US and global energy markets, but careful balancing of market fundamentals and geopolitics will be crucial.”

Rising LNG supply, not only from America but also from Qatar where the huge capacity expansion projects will be ready in 2027, could ease global LNG prices, thus incentivizing demand in the price-sensitive Asian markets, which are expected to lead global gas demand growth in the next decade.

Europe is also boosting LNG imports and will do so even at higher prices as it needs additional alternative supply after the end of the Russian pipeline gas deliveries, including the latest halt to flows via Ukraine.

Asia, for its part, is using growing amounts of natural gas for power generation and feedstock as emerging economies expand. The data center boom in both emerging and developed economies in Asia could also draw a lot of LNG supply into the region in the coming years.

With global LNG demand currently predicted to remain strong through the end of the decade, the new wave of supply may not create as large a glut as previously feared.

“If demand continues to strengthen, driven by improving macro conditions and new demand nodes like from data centers, then any oversupply in 2027 and 2028 could evaporate completely,” Saul Kavonic, an energy analyst at Australia-based research firm MST Marquee, told Bloomberg at the end of last year.