Global LNG Supplies Sold Out, Limited Supply Due to Insufficient Investment in Coming Years

Due to insufficient investment in supply, global competition for liquefied natural gas could strengthen in the next three years.

According to research results from Japanese companies, long-term LNG contracts have already been sold out. These contracts are of great importance as they offer reliable supply over a longer period at stable prices.

Countries around the world are struggling this year to secure energy supplies from major exporters like Qatar and the USA, but there are few new supplies expected to arrive before 2026. Meanwhile, Europe is racing to replace Russian gas with LNG, further exacerbating the global energy shortage.

This means that importers will be forced to rely more on the unstable and expensive spot market, where prices are currently nearly three times higher than long-term contracts. According to the International Association of Liquefied Natural Gas Importers, approximately 30 percent of all LNG deliveries last year were made through the spot market.

Officials from the Japanese ministry and executives from energy companies met to discuss LNG procurement plans, and Japan is poised to become the world’s largest LNG importer this year, considering it the best option for the country’s electricity generation.

Accelerated Pace in Germany

The lack of investment in LNG export projects means that supply will be very limited for years, according to a document from the Japanese Ministry of Trade, and if the Russian pipeline to Europe is completely cut off, the world could face a shortage of 7.6 million tons of LNG by January 2025. Japan has taken steps to increase energy security by allowing the government to timely purchase LNG in case companies are unable to do so.

LNG issues have also arisen in Germany, where new floating terminals will cost twice as much as previously announced, potentially leading to a payment of around 6.56 billion euros for terminal construction.

Liquefied gas is expected to replace Russian gas that was delivered via pipelines. Deliveries through Nord Stream 1 have been suspended following damage from an explosion whose cause has not yet been determined. Nord Stream 2, which was completed, has also been damaged but has not received operational approval due to the war in Ukraine.

Germany is now building several new terminals, and politicians are pushing the pace to secure gas imports via the North and Baltic Seas as soon as possible.