LNG Glut?: A System Investment That Creates Structural Demand
Every week I read headlines about a so-called coming glut in LNG. Analysts point to new export projects, rising capacity, and forecast softer prices. But from where I sit in this industry, I disagree. That ship has already sailed.
Here’s why: LNG isn’t just a fuel you turn on and off depending on the spot market. Once a country decides to enter the LNG ecosystem, it’s a system investment — and that investment creates structural demand that doesn’t reverse.
Why LNG Isn’t a Swing Fuel
Importing LNG requires more than a cargo delivery. Countries must commit to building receiving terminals, regasification plants, pipelines, and storage. They must also commit downstream: gas-fired power plants, industrial conversion, and residential distribution networks.
At the heart of this are gas turbines, which dominate the new power generation capacity being built today. These turbines run on natural gas. Once installed, a nation’s stream of electricity production becomes co-dependent on LNG supply. You don’t abandon that system — not after billions in capital and decades of planning.
This is why I don’t buy into the “glut” narrative. A market may look price-sensitive on the surface, but once it builds the system, demand becomes locked in.
Structural, Not Cyclical
I’ve seen this play out repeatedly:
• Locked-In Infrastructure – After investing billions, no government is going to let LNG import terminals sit idle and rust.
• Gas-Fired Power Generation – Once turbines are online, they run for 25–40 years, ensuring steady offtake.
• Industrial Retooling – Fertilizer, steel, cement, and petrochemicals adapt to natural gas feedstock, embedding LNG into economic production. It is not just energy security, it is National Food Security.
• Urban Expansion – Residential gas grids tie households and businesses into long-term demand.
This creates a rising baseline that doesn’t shrink when prices soften. In fact, the opposite happens: once infrastructure exists, offtake volumes usually expand.
From Price-Sensitive to System-Dependent
Countries may first enter the LNG trade out of necessity — to replace coal, diversify from oil, or reduce pipeline risk. But once the infrastructure and downstream systems are in place, LNG is no longer a discretionary purchase. It becomes an integral part of national energy security.
The Bottom Line
So when I hear forecasts of oversupply or looming gluts, I see something different. Yes, supply is growing, but so is structural demand. Once the system is built, there is no turning back.
That’s why LNG is different from other fuels. It creates its own demand.