Udyamee, Ahmedabad:
The global liquefied natural gas (LNG) market is bracing for a year of intense competition and price volatility as Europe’s growing appetite for LNG clashes with Asia’s demand for affordable energy. The tightening supply, compounded by geopolitical uncertainties, is reshaping global energy flows in 2025.
Europe’s LNG Hunger
Europe is expected to increase its LNG imports by 14 million tons this year, reaching a total of 101 million tons. This surge comes as the continent races to replenish gas storage depleted during a harsh winter and replace 15 billion cubic meters of Russian pipeline gas lost due to disruptions in Ukraine.
Europe’s growing reliance on LNG is tightening the global market, leaving fewer supplies available for other regions. Analysts predict this trend will make Europe the dominant force in absorbing new LNG supplies in 2025.
Asia’s Price Sensitivity
While Asia remains a key LNG consumer, its demand growth is projected to slow to 2% in 2025, down from 6% in 2024. Rising spot prices, which Rabobank forecasts to average $12.65 per million British thermal units (mmBtu), are discouraging consumption in price-sensitive markets such as South and Southeast Asia.
China, however, stands out as a significant player, with imports projected to hit a record 79–86 million tons. The increase is driven by new LNG terminals and long-term contracts, underscoring China’s strategic focus on securing stable energy supplies.
U.S. Projects Add Supply but Face Challenges
New LNG projects in North America, including Plaquemines LNG in Louisiana and Mexico’s Energia Costa Azul, are set to add 18 million tons to global exports in 2025, pushing total LNG exports to 410.6 million tons. However, these projects are unlikely to provide immediate relief, as full capacity will not be reached until late 2025 or 2026.
Geopolitical Risks Loom Large
Geopolitical factors are amplifying market uncertainties. Policies under former U.S. President Donald Trump, including the end of the LNG export permit freeze and threats of tariffs on Chinese goods, have introduced new risks. China could retaliate by shifting its LNG purchases to suppliers in the Middle East or Australia, potentially disrupting the global supply chain further.
Market Outlook
The global LNG market is set for a year of volatility as Europe’s insatiable demand and Asia’s price sensitivity create a tug-of-war over available supplies. Geopolitical tensions, coupled with delayed capacity expansions, add further pressure.
“Europe’s dominance in absorbing new LNG supply will leave other regions scrambling for resources,” said a leading energy analyst. “Price-sensitive markets in Asia will bear the brunt of this shift, while geopolitical risks could further destabilize gas flows.”
As 2025 unfolds, the global LNG market will be shaped by the intersection of energy security, economic pressures, and geopolitical strategies. Energy stakeholders are bracing for a challenging year ahead.
