The future of liquefied natural gas: Opportunities for growth

The COVID-19 pandemic has accelerated LNG market trends that were already underway. LNG players must pursue improvement in five areas to adapt to new conditions and seize opportunities for growth. 

The liquefied natural gas (LNG) industry is experiencing low prices and oversupply. Even before the COVID-19 pandemic, the LNG market was set for oversupply in 2020 and 2021 as new projects continued to grow capacity well beyond steady demand growth. Reduced gas demand because of the pandemic has added to excess supply, creating market volatility. And a sustained period of lower oil prices and increased competition among gas supply sources as new supply reaches the market have combined to erode margins, putting pressure on gas and LNG producers.

The long-term outlook for LNG, however, is brighter than that of other fossil fuels because of its comparatively lower cost and lower emissions from production and combustion. But to find a true competitive advantage amid a volatile market, the LNG industry must move beyond what were once winning strategies (control of gas resources, reliability of supply). Instead, LNG players should focus their efforts in five areas: capital efficiency, supply-chain optimization, downstream market development, decarbonization, and digital and advanced analytics. If done successfully, LNG could ride out an unpredictable market and find opportunities for faster growth.

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