Global LNG Industry Enters a New Phase

Many industry experts recently stated that the LNG industry has bid farewell to its rapid growth phase and has entered a new stage that requires meticulous development.

The global liquefied natural gas (LNG) industry is undergoing a profound restructuring.

Geopolitical conflicts continue to escalate, energy transition accelerates, and technological barriers deepen. Under the influence of multiple factors, LNG market prices fluctuate significantly, infrastructure utilization rates vary, and trade patterns are rapidly adjusting. Against this backdrop, the domestic LNG industry faces new challenges and opportunities. Several industry experts recently said at the 2026 Liquefied Natural Gas Conference that the LNG industry has moved beyond its rapid growth period and is entering a phase that demands careful cultivation.

Forecasting Models Struggle Against Market Changes

Currently, the contradiction between short-term sharp fluctuations caused by geopolitical conflicts and long-term downward expectations due to ample supply is reshaping the operational logic of the LNG market.

From the supply side, global LNG capacity is rapidly expanding. Data provided by Jiao Fangzheng, President of the China Petroleum Society, shows that by 2025, global LNG liquefaction capacity has increased to about 510 million tons per year. The growth is mainly concentrated in North America, with the US, Qatar, and Australia remaining the top three LNG exporters worldwide, with the US surpassing 100 million tons of LNG exports for the first time. The rapid increase in supply sets the stage for price declines.

However, ongoing geopolitical conflicts continue to impact market expectations. “Recently, conflicts between the US, Israel, and Iran have restricted navigation through the Strait of Hormuz, and Qatar has suspended LNG production, taking nearly 20% of global LNG export capacity offline. The latest reports indicate that an LNG receiving terminal in the Gulf region was attacked, causing international gas prices to jump. These sudden events have shaken the market, rendering supply-demand-based forecasts less reliable,” said Jiao Fangzheng.

Li Yalan, Vice President of the International Gas Union, pointed out that in the short term, due to Iran-related developments, the timing of a decline in global energy prices remains uncertain. “But the Strait of Hormuz cannot be blocked forever, and Russia’s LNG is increasing supply to the market.” She predicts that if the situation eases within two or three months, LNG prices will see a moderate decline in the second half of this year. In the medium term, from 2023 to 2030, prices are expected to continue falling, with the market becoming more buyer-driven. In the long term, prices will gradually approach costs.

Market uncertainty is especially pronounced in Europe. Laszlo Fritsch, Deputy CEO of Hungary’s National Energy Group, pointed out that transporting a single LNG cargo to Hungary might require crossing three countries and paying 11 transit fees, making transportation costs a significant part of gas prices. Norwegian Academy of Engineering Sciences member Yang Tao believes this uncertainty will further dampen upstream investment enthusiasm.

Technological Breakthroughs and Shortcomings Coexist

Faced with market volatility, the LNG industry is shifting focus toward more controllable areas. Over the past few years, China’s LNG industry has made significant progress in core equipment localization, but deep-seated technological weaknesses still remain.

“After years of effort, China has made important advances in equipment materials for low-temperature LNG industry, with all main equipment, major materials, and low-temperature valves now fully domestically produced,” said Ding Yi, Deputy General Manager of Sinopec Natural Gas Branch. “Especially the breakthrough in fully automated LNG loading and unloading arms, known as ‘China’s Big Arm,’ which now features automatic docking, replacing manual operations on-site.”

Suzhou Nuwei Valve’s Deputy Chief Engineer Yang Zhaobin delved into valve-level localization. The ultra-low temperature nature of LNG demands high-performance valves. If packing material freezes, sealing fails; after vaporization, volume expands about 600 times, requiring valves to have pressure relief functions. “By optimizing temperature gradients through finite element analysis and developing specialized sealing materials, domestic manufacturers have overcome these technical challenges, ensuring reliable sealing.”

Shenhua Group’s Deputy Chief Engineer Shi Jinlong revealed that the efficiency of the compressor impeller models used in LNG refrigerant compressors can now reach 87%, making domestically produced compressors competitive in international bids.

While technological breakthroughs continue, safety challenges at LNG receiving terminals and issues with digital software “bottlenecks” remain industry shortfalls.

Regarding safety challenges, Zhang Laibin, Academician of the Chinese Academy of Engineering, pointed out that low-temperature pipelines often use insulation structures, and LNG leaks can flow and vaporize within the insulation layer, making leak point detection difficult. Additionally, existing low-temperature protective suits struggle to balance high protection with operational flexibility, and long-term wear can cause discomfort and accidents.

Academician Chen Zhangxing of the U.S. National Academy of Engineering warned from a digital perspective that integrating physical mechanisms with artificial intelligence, and fusing data with knowledge, is necessary to address hallucination issues and improve model interpretability.

Key Platforms for Integrated Development

If ensuring current supply security depends on technological and equipment independence, the future of the industry hinges on repositioning within the energy transition wave.

Li Yalan stated that natural gas is not just a bridge to the future but part of the future itself. “Over the past decade, the share of fossil fuels globally has decreased from 82% to 80%, a decline of only 2 percentage points. Oil dropped from 32% to 29%, coal from 28% to 26%, while natural gas increased from 22% to 25%, the only fossil fuel to grow. The world will need more energy in the future, and natural gas will play a long-term core role.”

Several experts focused on the integration of LNG with new energy sources.

Qu Shanshan, Deputy General Manager of China National Petroleum Corporation’s LNG Company, introduced the concept of a “New Energy Quality and Power Network.” “LNG receiving stations will no longer just be turnaround points for natural gas but will become hubs for converting various energy forms such as hydrogen, ammonia, and methanol. When wind and solar power are abundant in the northwest, on-site electrolysis can produce hydrogen, which is then converted into green methanol via pipelines connected to LNG receiving stations, enabling flexible material and energy flow and spatial-temporal transfer. This concept aims to systematically address core bottlenecks in renewable energy absorption and storage.”

Zhang Chao, Deputy Director of the Petroleum Storage and Transportation Professional Committee of the China Petroleum Society, envisioned an “Offshore Energy Island” combining natural gas and LNG with other energy sources. “By integrating floating wind farms, floating photovoltaic systems, CCUS facilities, and LNG platforms, offshore facilities can become self-sufficient hubs capable of exporting multiple energy products to land.”

Technological integration is already underway. From power generation using cold energy, aquaculture with cold water, to carbon capture demonstrations at gas power plants, and the development of solid oxide fuel cells, the LNG industry is no longer a “lone wolf.” Currently, China’s first domestically developed 5 MW cold energy power generation unit has been commissioned at Zhejiang LNG, with a total output exceeding 20 million kWh; a modular natural gas hydrogen production unit has been put into operation in Foshan, enabling the longest-distance cross-ocean transport of liquid hydrogen.

Using technological independence to reduce external reliance and cross-sector integration to find new growth opportunities are consensus among experts. Whether it’s the “Power and Matter Network” or the “Energy Island,” the industry is shifting from pursuit of growth to resilience, from passive response to proactive planning, redefining its boundaries.

Original Title: The Global LNG Industry Enters a Deep Restructuring Period

Text by | Our Reporter Qu Peiran

Produced by | China Energy News (cnenergy)

Editor | Li Huiying