Natural gas market poised for renewed growth following 2025 slowdown amid increased LNG capacity and shifting energy dynamics. ESG BROADCAST shares key takeaways.
Regulatory Extract:
Global natural gas demand is expected to regain momentum in 2026 after a temporary deceleration in 2025, as reported in the International Energy Agency’s (IEA) July 2025 Gas Market Report. The anticipated rebound is attributed to a significant expansion in liquefied natural gas (LNG) supply, which is projected to ease prevailing tight market conditions and stimulate demand across Asia and beyond.
The report reveals that the global natural gas market remained tight in early 2025, driven by persistently low Russian pipeline exports to the European Union, slow growth in LNG production, and strong European gas storage injection requirements. These factors combined with broader macroeconomic uncertainty to lower global demand growth to 1.3% in 2025, a drop from 2.8% in 2024. Notably, Asia-Pacific markets—sensitive to price fluctuations—posted the weakest annual consumption growth since the 2022 energy crisis.
However, the outlook shifts significantly in 2026, when demand is forecast to accelerate to 2% globally. This increase is closely linked to a 7% jump in LNG supply—equal to 40 billion cubic metres—the largest annual rise since 2019. Major contributors to this expansion include new export terminals in the United States, Canada, and Qatar. According to IEA Energy Markets and Security Director Keisuke Sadamori, “The wave of LNG supply that is set to come online is poised to ease fundamentals and spur additional demand, especially in Asia.”
Despite the optimistic supply forecast, the IEA notes unusually high uncertainty due to volatile geopolitical developments and economic variability. The report also highlights the Middle East’s growing role in global price stability and risk exposure, noting the region’s influence on recent market volatility.
In regional terms, gas consumption in Europe grew by 6.5% in the first half of 2025, buoyed by higher reliance on gas-fired power due to lower wind and hydroelectric output. Conversely, China experienced a 1% decline in gas demand, alongside a dramatic 20% drop in LNG imports—reflecting both domestic economic shifts and continued sensitivity to elevated prices. North America recorded a 2.5% increase in gas usage, particularly during the colder first quarter.
The IEA’s report underscores the strategic role of natural gas as a transition fuel, especially in systems with high renewable energy integration, where gas supports supply reliability during intermittency.
Strategic significance lies in the timing of new LNG supply, which may mitigate ongoing energy security risks while supporting cleaner-burning fuels as economies continue to shift toward net-zero targets. For ESG stakeholders, the outlook emphasizes the need to align procurement and hedging strategies with evolving market structures and geopolitical realities, particularly as natural gas remains central to decarbonisation in the medium term.
ESG BROADCAST will continue monitoring the updates related to this topic. Stay tuned to be updated on the related policy and pivotal regulatory shift.
