LNG Glut Imminent
A long-term LNG glut is in the cards.
First, if all LNG planned projects are built, there will be a buyer’s market with low LNG prices.
Second, the LNG sector is shooting itself in the foot. Higher LNG prices have translated into higher prices for LNG exporters in the short-term, a catalyst for importing gas countries to wean off volatile gas prices and supplies, especially in Southeast Asia and Europe.
The glut has been delayed by the Middle East war but nevertheless will begin in 2026 causing prices to drop. The Middle East war is artificially keeping prices high.
Declining LNG demand
Asia
Asian demand fell 5% in 2025. This is much due to commitments to renewables and scaled back infrastructure.
The Russian invasion of Ukraine had already pushed up LNG prices, pricing some Asian buyers out of the market.
Simultaneously, the price per unit costs of solar panels have fallen 56% from 2022 to 2026 rendering gas-fired power uncompetitive with solar plus storage. Chinese solar panels production and exports set a record in March 2026.
LNG high prices and lower cost renewables permanently reduced LNG long-term demand by metric tonne per annum.
The Middle East war has exacerbated the trends towards LNG high prices diminishing demand in China, the Philippines, Vietnam Pakistan and Thailand where the transitions to alternative energy are well-underway.
Many countries not only sped up the transition to renewables but also set more ambitious green transition goals.
By July 2026, China’s year-to-date LNG imports dropped to their lowest level since 2019. China’s Sinopec cancelled a 1 Mtpa LNG expansion project.
Furthermore, China is a reseller of LNG, having sold 17-19 metric tonnes (Mt) of LNG in 2025, China’s LNG surplus stemming from lower domestic consumption and dwindling reseller markets, could reach 47 Mt in the early 2030s.
Turning to South Korea, in April 2026 it announced increasing renewables capacity to achieve 100 GW by 2030, including an immediate acceleration of 7 GW of renewables and 1.3 GW of storage. In addition, South Korea restarted 4.75 GW of nuclear by May 2026.
Due to turbine shortages, South Korea’s underutilized gas costly gas fleet cannot expand.
Then there’s Pakistan which has made a drastic transition to renewables, solar in particular, in the last two years such that it began turning back LNG ships. From the bottom up, factories, farms and individuals are switching to solar, such that solar now accounts for 20% of the electrical generation in the country. Do it yourself installations are to be seen everywhere in Pakistan, residents using TikTok to guide them on installations. Solar micro grids supply energy to previously undeserved regions. Indeed, Pakistan is currently China’s largest solar export market, furthering Pakistan’s energy self-sufficiency.
Pakistan may well encounter a long-term surplus of 177 LNG cargoes by 2032.
As for Thailand, it will increase rooftop solar by 5 W by 2027.
Rooftop solar capacity in the Philippines has nearly doubled from 721 MW in early 2025 to around 1.3 GW by early 2026, still only 1% of the country’s theoretical rooftop potential of 106,000 MW. Meanwhile, the Philippines, for the third time brought to an end LNG to power projects.
Vietnam repurposed 4.8 GW of LNG-to-power projects to renewable energy.
European Union
In Europe, the momentum to reduce gas consumption has been in overdrive since the Russian invasion of Ukraine. From 2021 to 2024, EU gas consumption dropped 20% and a 23% decline in EU gas imports is predicted from 2025 to 2030.
Unhinged increases in LNG supplies
Estimates of the buildout
Building LNG plants run into $20-30 billion.
Every proposed project outside the Persian Gulf is slated to be built. From 2026 to 2030, new LNG capacity coming online will reach 254 million tonnes. That translates into 3 times capacity growth through to 2030, compared to 2021 to 2025. Low LNG prices definitely lie ahead, but LNG price volatility has been embedded in perceptions of importing nations, while renewables can be installed faster and at less cost.
There are 700 billion cubic metres of LNG projects waiting for a final investment decision (FID), including 110 billion in the US. The US alone accounts for half of the upcoming global exports of LNG. In 2025, global LNG production was at 600 billion cubic metres. The supply glut and lower LNG prices are inevitable.
Prior to the Middle East conflict, the planned LNG projects represented the biggest LNG capacity expansion in history. About 345 billion cubic metres (bcm) of new export capacity is expected to come online between 2025 and 2030, an equivalent to 50% of currently available supply.
The International Energy Agency estimates that 140 bcm of cumulative LNG supply could be removed from the market from 2026 to 2030. That loss could be equivalent to 15% of new LNG supply anticipated to come online during that period.
The bottom line is that supply will keep expanding while LNG imports decline. In 2026, up until June, LNG supplies grew 17% year-over-year to 28.7 million tonnes, while the Persian Gulf output declined 25.6 million tonnes, 58%, over the same period.
Key exporters
As Qatari LNG exports recover, global markets will move back to oversupply. When Qatar LNG exports get back to normal, “The Economist” estimates this will generate 55-75 metric tonnes of oversupply, lowering the cost of lifting LNG cargoes under most long-term contracts.
At present 3 countries represent 60% of LNG world exports, the US, Australia and Qatar.
North America, Africa and Australia will add 50 bcm of LNG supply in 2026. During the blockage of the Strait of Hormuz, these supplies will be sold at high prices.
Mozambique to Papua New Guinea and Argentina also plan to pursue Asian LNG import markets.
In the US, since the start of the Middle East war, 3 new US export terminals have been approved to go forward.
Donald Trump’s announcement of a South Korean investments of $54 billion humongous LNG project in Alaska is on shaky ground because of the pending LNG glut. As already indicated, South Korea cannot absorb the Alaskan LNG project output, which represents 40% of South Korea’s demand. Accordingly, South Korea has distanced itself from Trump’s announcement. The South Korean government claims it has only entertained preliminary talks with the US on the project, “subject to meeting commercial reasonableness.”
The Alaskan LNG project appears to be a Trump attempt to improve prospects for the Republican slate in the state to gain momentum for the mid-term elections.
The Alaskan LNG is not a godsend to counteract the crisis in the Persian Gulf.
Canada joining the club
As for Canada, the Carney administration announced the British Columbia (BC) fast-tracking of LNG Canada Phase 2 as a “national interest” priority. This despite uncertainty over construction costs, inflation, LNG oversupply and an unstable trade environment.
LNG Canada Phase 2 goals are to produce 28 million metric tonnes per year, but has yet to secure anchor clients. Under “normal” circumstances, a project is assessed over muti-decade projections. Present windfall LNG profits now aren’t any guarantee for future prospects.
Annual CO2e emissions from LNG Canada will be 44 million tonnes, twice that of annual tonnes of passenger cars in Canada.
The first Phase burned of more methane than any other facility in the world.
The CoastalGas Link to transport Canadian shale gas to LNG Canada has encountered cost overruns.
The benefits will flow almost entirely to foreign entities.
One of the additional projects is BC’s Ksi Lisims, with two floating near-shore LNG production, storage and offloading facilities. The latest project cost estimate is C$30 billion, far off from the original projection of C$9 billion.
When completed, well after the Middle East conflict, these Canadian LNG projects will face weaker demand, more abundant LNG supplies and lower prices.
The takeaway
This should be a no brainer.
LNG demand will shrink due to a global transition to renewables, economic imperatives to reduce vulnerability of importing nations to LNG prices and supplies and increasing momentum to address climate change.
Concurrently, LNG supplies are slated to explode.
The converging contradictory momentums suggest investments in new LNG projects will stumble, not worth the $20-$30 billion required for an LNG export terminal.
