Natural gas is still expected to dominate the global energy mix and support decarbonization into the middle of the century despite recent market volatility, but the world’s current energy crunch could be accelerating LNG’s position as the trade of choice, according to researchers from the Gas Exporting Countries Forum (GECF).

In a recently published Global Gas Outlook report, researchers again estimated that natural gas will hold the largest portion of the global energy mix in 2050, growing from 23% last year to 26%. However, how that gas may reach end-users in the future could be changing more quickly due to recent geopolitical events.

GECF researchers previously estimated liquefied natural gas could account for less than half of all global gas transactions in 2030 before pushing to 56% by 2050. In the latest report, researchers now expect LNG trade to surpass pipeline volumes as soon as 2026. LNG trade is expected to more than double traded pipeline volumes by 2050, reaching an estimated 1,170 billion cubic meters/year (Bcm/y).

“With domestic production declining in some of the Asia-Pacific countries and Europe, and with pipeline exports to Europe also declining, LNG is gaining momentum and becoming the preferred natural gas supply source,” researchers wrote in the report.

The GECF is an international governmental organization headquartered in Doha, Qatar, and made up of 19 member countries. The organization publishes an annual forecast tracking changes and expectations for global gas markets and production into 2050.

Since Russia’s invasion of Ukraine last year, pipeline imports from Russia to Europe have dwindled to a trickle and global prices for LNG have trended upward. GECF researchers noted the shuffle of supply dynamics could also be fueling infrastructure investments needed to meet future gas demand.

Total LNG export capacity grew from 270 million metric tons/year (mmty) in 2010 to 462 mmty at the end of 2021. By 2050, LNG export could double to 1,026 mmty. By 2050, LNG regasification capacity is also projected to almost double compared to current levels to around 1,840 mmty.

GECF researchers suggested that the acceleration of LNG’s market dominance and growing infrastructure could also further solidify “a global gas market” sooner than expected. 

LNG prices are anticipated to remain volatile and markets highly competitive, at least until more export capacity becomes available after 2026. However, researchers also predicted European, Asian and Latin American prices to converge more closely as regions move to further integrate gas systems.

“Regional gas markets, which have weaker connectivity, are expected to become strongly integrated after 2035 as rapid LNG capacity development, transportation and trading networks – including large-scale export pipeline projects – support market integration,” researchers wrote.

Despite recent focus on Europe, researchers estimate Asia will continue to be the largest LNG importing region into 2050. Emerging countries, especially in South and Southeast Asia, will drive LNG growth as energy demand increases across the regions. Around 60% of the world’s total LNG regasification will be in Asia Pacific and 20% will be in Europe.

‘An Additional Vector’ for Natural Gas

While the global LNG industry is expected to remain profitable into 2030, researchers wrote “diverging trajectories of energy transitions for each region and sub-region might be challenging.” LNG industry investment is expected to dip through 2040 as capacity becomes available and renewables ramp up.

Natural gas use in generating electricity is expected to grow more slowly into 2050 than renewables and other sources. However, researchers noted the energy transition guaranteed gas will have a longer life than other fossil fuels.

The use of carbon capture utilization and storage (CCUS) is expected to make natural gas a viable option for reducing carbon emissions and will allow countries to transition to hydrogen production. Gas use in producing hydrogen with reduced carbon intensity, referred to as blue hydrogen, is expected to account for 205 Bcm/y of global gas demand by 2050. Middle Eastern and European countries are expected to account for 55% of the increase in gas demand from blue hydrogen.

In 2021, 62% of the world’s hydrogen was produced from natural gas with green hydrogen – zero carbon or net-carbon hydrogen made by electrolysis – made up less than 1% of global production. In 2022, the Global CCS Institute reported that 40 hydrogen facilities equipped with CCS are at various stages of development.

“Blue hydrogen generation will be an additional vector for increased gas use, given countries’ efforts to scale up the deployment of low-carbon hydrogen in energy systems,” researchers wrote. “Blue hydrogen will be attractive due to the maturity of the technology, lower cost and synergy with natural gas infrastructure.”