LNG

The global fleet of LNG-fuelled could almost double from its current base of 850 ships if scheduled deliveries and orders proceed as expected, Shell told investors, projecting LNG bunkering demand to jump from 3-4 mtpa to about 26 mtpa by 2035.

The British government is anticipated to announce new sanctions today targeting Russia’s illicit shadow fleet for oil and LNG, following the interception of a sanctioned Russian oil tanker in the Channel on Sunday. The move could disrupt a segment of LNG trade that relied on opaque shipping and financing channels.

Arctic LNG 2 is expanding its tanker fleet to re-route exports to Asia ahead of the EU’s planned 2027 ban on Russian LNG imports. The Novatek-led project is estimated to need up to 40 additional LNG carriers to sustain Arctic LNG 2’s targeted export volumes beyond 2026.

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 .

EU member states spent more than €7.2 billion ($8.4 billion) on Yamal LNG last year – despite a full ban on LNG imports coming into force on January 1, 2027.  “Russia has no adequate alternative to the EU market,” Urgewalt analysts commented, noting more than three-quarters of all Yamal LNG exports currently go to Europe.

Global LNG fleet growth is lagging behind upcoming export capacity, although IMO data indicates that 2026 deliveries will mark a record year. Yet the 234 newbuild LNG carriers scheduled for 2026–2030 could fall short of transporting the 229 mtpa of new liquefaction capacity due online by 2030, particularly if vessel retirements accelerate. 

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.

Continuing weak demand and excess tonnage are set to depress LNG shipping earnings in the near term, Drewry analysts forecast. Yet there's a silver lining further out, as rates will rebound over anticipated vessel shortages once an array of proposed liquefaction projects start operation.