LNG

LNG use for transport is driving infrastructure investment in China, where the fleet of LNG-fuelled trucks tripled since 2019 and reached more 1 million vehicles at the beginning of 2026. However, battery electric trucks have now outcompeted LNG ones, capturing 29 percent market share in 2025 versus LNG's 24.8 percent .

Singapore is at the heart of an evolving regional power grid which is poised to lower the share of LNG-fuelled power generation. If all proposed interconnections get built, they could unlock up to 25 GW of renewable and energy storage capacity worth over $40 billion, Rystad Energy reckons.

Today, over 96% of Singapore’s electricity is generated by burning natural gas which needs to be imported as LNG. Yet, Rystad analysis finds that importing electricity through the regional grid is cost-effective for the city state and could help reduce CO2 emissions by 13 million tons per year.

Higher load factor helps reduce electricity cost

Though CCGT are flexible and reliable in terms of operation, comparing the levelized cost of electricity (LCOE) reveals that electricity imports via ASEAN interconnectors may offer a more cost-effective alternative to building new domestic CCGT capacity. Singapore’s Electricity Market Authority (EMA) current regulatory framework require projects to reach an annual load factor of at least 60% within five years of commercial operation. For project developers there is a strong economic incentive to exceed this target.

Raising the load factor target from 60% to 100% could lower the overall LCOE, as this helps spread transmission costs more equally. This impact is particularly significant in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost optimization benefits particularly for hydropower projects

Solar-plus-storage hybrid systems, with optimized direct current/alternating current (DC/AC) configurations and appropriately sized battery energy storage systems (BESS), can already achieve load factors above 90%. By integrating solar and BESS technologies with the necessary backups, these systems can reach the level of reliability required by Singapore’s EMA and could be comparable to other dispatchable energy sources.

“Hybrid systems could deliver lower LCOEs than many in the industry currently anticipate. Singapore, strategically positioned at the heart of this evolving energy system, stands to gain significantly,” said Rystad’s renewables analysts Nevi Cahya Winofa.

LNG use for transport is driving infrastructure investment in China, where the fleet of LNG-fuelled trucks nearly tripled over the past five years. Government data indicates, however, utilities liquefy enough domestic gas to meet trucking demand – while battery electric trucks are about to outcompete LNG-fuelled ones.

“China’s surge in LNG trucks will not last” and is likely to ease by 2030, Wood Mackenzie reckons. As battery technologies advance, electric vehicles are expected to displace LNG as the main threat to diesel – and demand for the dirty fuel is hence forecast fall from 2.3 million b/d in 2023 to 0.7 million b/d by 2050.

“LNG-powered trucks are gaining in popularity, but should only be seen as a bridging solution,” said Shiqing Xia, WoodMac consultant for Oils and Chemicals. “Investment in electric or hydrogen fuel cell trucks to respond to future market demands will not only help to meet environmental requirements, but could also give companies a long-term competitive advantage.”

Affordability issues

In India, the affordability of LNG is a main stumbling block – both for burning imported gas to generate electricity and also for combusting LNG as a transport fuel. The fertilizer, for once, consumes substantial LNG volumes in India though this demand largely hinges on government subsidies, handed out to keep low consumer prices.

Imported gas still costs too dear for the world’s emerging economies, Bloomberg finds, but analysts are optimistic that a supply surge starting from 2027 will bring down fuel costs in Asia.

Analysts question Shell’s bullish case for LNG market growth over the next 15 years. This year, the company increased its demand expectations to between 630 and 718 mtpa by 2040, some 1-5% higher than last year’s projection.

Dwindling demand for imported fuels

Yet, LNG demand has remained limited in sectors that do not receive fiscal support. According to IEEA analysis, global LNG prices would have to fall by half to compete in power generation, where gas provides less than 2% of the electricity mix.

“With the exception of China, natural gas consumption has grown mainly in countries that produce enough gas to either be self-sufficient or net exporters, like the U.S. By contrast, gas demand has tended to fall in markets that require large import volumes, like Europe and Japan,” IEEFA’s Sam Reynolds and Christopher Doleman commented.

Looking at Vietnam, downside risks get more pronounced: The country’s latest Power Development Plan initially targeted 22 gigawatts of LNG-fired power capacity by 2030, but a recent draft revision lowered the target to 18 GW due to slow progress.

Only one LNG plant with 1.6 GW of capacity has secured a power purchase agreement to date, and analysts fear that very few other projects may be operational before 2030. Factoring in fuel costs, it’s worth noting that Vietnam’s wind and solar generation now exceeds gas-fired power, which dwindled 45% over the past ten years.

Kpler data shows that the volume of LNG traded in 2024 grew by its lowest level since 2012 which makes analysts questions oil majors’ bullish stance on global gas demand. In fact, Shell’s latest LNG Outlook departs from previous arguments: It downplays LNG’s role in the power sector and no longer emphasizes claims that LNG can displace coal in Asia. Instead, Shell argues that data centres and AI will drive long-term LNG demand, though this remains uncertain.