For much of the world, especially in developing economies, peak gas demand will occur in 2040 or later. There is also increasing consensus that natural gas will be a key transitional fuel, especially in Asia. Liquefied Natural Gas trading is projected to grow 3–4 percent annually until at least 2040, whereas pipeline trade is projected to decline 0.2 percent annually during the same period. Global LNG demand is forecasted to grow from 400 million tonnes per annum to close to 700 million tonnes per annum by 2040.
Fueled by Trump’s reelection, the United States could provide the world’s biggest LNG supply growth opportunity, and major energy companies from Saudi Arabia, the United Arab Emirates and Qatar are betting on it.
QatarEnergy Leads the Way
Rapid LNG development along the Gulf of Mexico enabled the United States to become the world’s biggest LNG exporter in 2023 with 94 million tonnes, overtaking Qatar (80 million tonnes) and Australia (79 million tonnes). Though Russia hopes to grow its LNG capacity, the LNG supply market will likely continue to be dominated by the big three: the United States, Qatar and Australia.
To help monetize its giant North gas field – which has an area more than half the size of the country itself – Qatar has created partnerships with major LNG players, including ExxonMobil, Shell, TotalEnergies, ConocoPhillips, Chevron and ENI.
State-owned QatarEnergy is among the first international oil companies to enter the United States’ LNG industry, with a 70-percent equity in the Golden Pass LNG terminal in Sabine Pass, Texas. Initially, Golden Pass planned to import LNG from Qatar, but following the U.S. shale revolution in the late 2000s, it became increasingly clear that this didn’t make economic sense. In 2012, QatarEnergy and ExxonMobil decided to turn Golden Pass into an LNG export facility. Now under development, the $10 billion project will include three trains with 18-million tonnes per annum of total capacity. The first LNG from Golden Pass is expected in 2025.
At full capacity, Golden Pass LNG will add approximately 13 million tonnes per annum of LNG production from the United States to Qatar’s overall LNG portfolio, which is being upgraded from 77 million tonnes per annum to 142 million tonnes per annum by 2030.
ADNOC Enters U.S. LNG
In May 2024, United Arab Emirates’ leader, Abu Dhabi National Oil Company, entered the U.S. LNG market, acquiring an 11.7-percent stake in phase one of NextDecade’s Rio Grande LNG project in Texas. The project has three trains and a total capacity of 17.6 million tonnes per annum. Final investment decision for phase one was taken in July 2023. ADNOC also signed a 20-year offtake agreement for 1.9 million tonnes per annum from the fourth train. ADNOC has an option to acquire additional equity in Trains 4 and 5, once FIDs have been taken on those projects.
NextDecade LNG is facing legal issues with FERC concerning environmental permits; however, with Trump’s reelection, analysts are projecting a much brighter future. NextDecade’s share price rose 27 percent after Trump’s win. First LNG for phase one of Rio Grande LNG is expected in 2027 for Train 1. Trains 2 and 3 will be in 2028 and 2029.
ADNOC is also reportedly eyeing additional U.S. LNG investment opportunities. With a deep pocket of $80 billion from its recently established investment vehicle XRG, ADNOC is positioned to grow its global LNG, chemical and low carbon project portfolios worldwide, particularly within the United States. For example, it recently took a 35-percent stake in ExxonMobil’s Baytown blue hydrogen project.
Saudi Aramco Augments its LNG Portfolio
Despite having one of the world’s biggest oil reserves, Saudi Arabia only has 210 trillion cubic feet of gas reserves – less than a quarter of its regional rival Qatar. Aramco is intensifying its effort to find more domestic conventional and unconventional gas and has started growing its international gas position.
Saudi Aramco entered the global LNG business in September 2023, when it paid $500 million for a minority stake in MidOcean Energy, an emerging LNG portfolio player led by former Shell executive De la Rey Venter. In June 2024, Aramco signed two LNG deals with U.S. LNG players: a 20-year LNG sale and purchase agreement (SPA) for 1.2 million tonnes of LNG with Rio Grande LNG and a Heads-of-Agreement (HoA) for a 20-year LNG SPA for 5.0 million tonnes per annum for Port Authur LNG Phase 2 with Sempra. The HoA further enables Aramco to become a potential 25-percent equity holder in Phase 2.
Saudi Aramco’s Upstream President Nasir Al-Naimi said, “We expect LNG to play an important role in meeting the rising (global) demand for secure and efficient energy,” and “This agreement (with Sempra) is a major step in Aramco’s strategy to become a leading global LNG player.” We can reasonably expect Aramco to turn the non-binding agreements with NextDecade and Sempra into firm SPAs soon.
What to Watch
It will be interesting to see if QatarEnergy will expand beyond its 70-percent holdings in Golden Pass LNG. In a way, QatarEnergy would be growing its largest LNG competitor, even though its equity would help the LNG arbitrage position on the Pacific and Atlantic basins.
Iraq is busy increasing its domestic oil production and unlikely to invest in the United States. Kuwait, on the other hand, has a history of international growth through its investment arm Kufpec. Whether it will enter the U.S. LNG market remains to be seen. Regardless, the United States is poised to grow its LNG market significantly in the coming years, and Middle Eastern companies appear to be ready to ride on the growing tide.