The key driver of the growth was commissioning of new LNG production lines. The total global capacity of LNG plants almost doubled between 2010 and 2023: from 321 billion to 628 billion cubic meters per year, three quarters of which accounted for the United States (120 billion cubic meters per year) last year and South and East Asia (203 billion cubic meters per year) and the Middle East (133 billion cubic meters per year). The remaining quarter was accounted for by all the other world countries, including Russia (40 bcm per year) and African countries (98 bcm). At the same time, utilization of the already built capacities varies from region to region: while the global ratio of actual LNG production to the designed capacity was 83% last year, it was 91% in the US.
The industry’s main trend is the decline in popularity of oil-linked contracts. Whereas in 2010 the share of agreements where prices were determined depending on the price of the basket of oil and oil products accounted for 77% of the contracted LNG volumes (216 bcm), in 2023, it was only 57% (313 bcm). The key reason was the spread of contracts linked to the cost of gas at key hubs in Europe (TTF) and in the USA (Henry Hub). Another trend is the decline in the share of fixed-destination contracts (from 43% in 2010 to 32% in 2023). These are signs of the market’s growing flexibility, allowing suppliers and traders to react more quickly to changes in demand and prices.
South Korea remains the largest supplier of LNG tankers, with 73% of the world’s gas carriers built there. Japan (12%) and China (12%) rank the second and the third. Kept estimates that building and commissioning of a tanker takes an average of 48 months. Given the length of the investment cycle, more than 60 new LNG tankers will be commissioned globally in 2024. Over the next five years, their annual commissioning will increase to more than 80 units.
