This Perspective on LNG Oversupply is based on a presentation given at Gastech 2026 in Bangkok by Adam Bradfield, titled: “LNG Players after the flood: how the upcoming wave of supply will reshape the industry of the 2030s.”
A wave of LNG supply is coming
The conventional assumption is that this means more choice, greater liquidity and lower prices.
Our Perspective argues that the more important question is, who carries the risk when supply growth meets less dependable demand. Gas Strategies’ scenarios indicate potential peak LNG oversupply of around 75 Mt even in our Reference Scenario, with materially greater downside if LNG demand proves more vulnerable to affordability, geopolitics and competing energy sources.
That has some potentially uncomfortable consequences:
- Portfolio scale alone may no longer be an advantage. What matters increasingly is the ability to identify and manage value, contractual exposure and delivery risk across the whole portfolio
- US LNG provides valuable flexibility, but that flexibility transfers balancing risk to capacity holders. At around $150 million of fixed charges for every 1 Mt of cancelled LNG, almost $11.25 billion of value could potentially be at risk under our Reference Scenario at peak oversupply
- Counter-intuitively, a global LNG surplus may not stop new projects being sanctioned. Low-cost and geographically differentiated supply can still create strategic value, even when the world as a whole does not need more LNG
The implication is that oversupply does not simply destroy value. It
redistributes it.
The winners of the next LNG cycle may therefore not be those with the greatest scale, but those best able to adapt their portfolios, contracts and decisions as market conditions change.
Our Perspective “The LNG market after the supply wave”, explores what this could mean for
portfolio players, US LNG capacity holders and developers considering the next generation of supply.
Key highlights within this report
- A large wave of new LNG supply is approaching. It could create a long period of oversupply at a time when geopolitics, volatile prices, and competing energy options are making demand less predictable
- Portfolio players will carry much of this risk. Scale will still matter, but it will not be enough.
Success will depend on how well companies manage value, risk, and delivery across assets,
contracts, markets, and counterparties as conditions change
- US LNG will remain strategically important because it offers flexibility and supply diversity. But that flexibility has a cost. If cargo economics weaken, cancellations and shut-ins will leave capacity holders paying fixed charges and carrying much of the burden of balancing the market
- Oversupply will not necessarily stop new projects being sanctioned. Low-cost projects and
those that improve geographic diversity of supply may still attract buyers and finance, even if the global market does not need much more supply
If you are making portfolio, contracting or supply investment decisions for the 2030s, download our report, and email Louise to discuss how specialist gas consultants, Gas Strategies can help you capture greater value.
