LNG

2025 will see hydrogen gain traction as an alternative – potentially rival – fuel to LNG as the U.S. will become the leader in blue hydrogen production, while electrolysers made-in-China drive competition and spur investments in ammonia. Addressing the mismatch between FIDs and offtake contracts will, however, be crucial to scaling hydrogen for power generation and as a fuel for shipping.

Construction for ‘ArtawiGas25’ – a first processing unit to recover associated gas from the Ratawi field in southern Iraq – has been started by TotalEnergies together with Basra Oil Company and QatarEnergies. Built at a cost of US$250 million, the facility will be expanded to eventually gather and process enough gas to fuel 1.5 GW of power gen capacity.

The project is part of set up to maximise the use of Iraq’s hydrocarbon resources by setting an end to the wasteful practice of flaring natural gas that comes as a by-product of extracting crude oil in Iraq’s southern Basra region.

Ratawi is a heavy oil field, situated onshore, which recovered just over 10.43% of its total recoverable reserves as of today. Peak production is expected in 2029. At current production rates, Ratawi currently accounts for approximately 2% of the Iraq’s daily oil output – as well as an unspecified amount of associated gas which will now be gathered and processed for use as fuel for generating electricity.

Gathering gas from three oil fields

The Gas Growth Integrated Project (GGIP), launched in September 2021, is a US$10 billion project designed to enhance the development of Iraq’s natural resources and improve the country’s electricity supply. Phase-1 of the gas processing plant is designed to recover 300 Mcf/d by eventually recovering gas being flared at three oil fields – enough to supply gas to 1.5 GW of power generation capacity.

TotalEnergies is the operator of the field and owns a 45% stake in the ArtawiGas25 processing unit, under construction for a total cost of US$250 million, while Basra Oil Company has a 30% stake and QatarEnergy owns the remaining 25%. The Qatari oil and LNG major is understood to be interested in replicating gaining know-how about gas processing and may well replicate lessons-learnt elsewhere in the Middle East.

Quest to replicate project across Iraq

The modular design of ArtawiGas25 could also pave the way for potential replication across other Iraqi oil fields. According to TotalEnergies, ArtawiGas25 will create up to 160 direct and indirect jobs for Iraqi nationals during construction phase and 30 jobs during operation phase.

The launch the ArtawiGas25 project gives the Iraqi people a “tangible insight into the benefits of the GGIP, which will provide more energy with less emissions,” said Julien Pouget, senior VP Middle East & North Africa, at Total Exploration & Production.

Through this project, the French oil major seeks to demonstrate its capacity to deliver valuable and fast-track solutions in accordance with the Iraqi government’s energy strategy and the country’s electricity needs. To that end, much of the processed gas has been sold forward to electric power producers in the Basra region while construction of a 1 GW solar park is due to commence in the coming weeks.

European LNG buyers fail to significant attract more deliveries although prices were much higher in the first week of 2025 than early last year. “There is a stickiness in LNG trade flows to Asia,” Energy Aspects said, referring to structural demand growth and heavy demand for spot cargoes from less price-sensitive markets like Japan and South Korea.

Analysts at the London-based consultancy found that Asian LNG demand has so far only been growing by 6.0 million tons year-on year y in 2025, which is down from 16.1 Mt growth last year. But Europe still stays very reliant on the increments in global LNG supply to meet its minimum storage targets by end-October.

A price-sensitivity analysis on how much Asian gas markets can call on spot and divertible supply at different price levels, found that at $10–20 per MMBtu, a $1/MMBtu rise, equal to €3.24/MWh, in TTF prices only weakens non-European demand by 0.89 million tons per annum (mtpa).

“European prices are already near the top of the coal-to-gas fuel-switching range and we already expect Europe to just meet its storage targets, so a market tightening of 5 bcm (for example, from cold weather in Europe and Asia over Q1-25) could propel TTF prices up by around €13.50/MWh,” analysts commented.

Quick drawdown on inventories

Europe entered January with gas inventories at just 79.2 bcm, or 73% full – a decrease by 15.3 bcm y/y which makes it difficult to rebuilt stocks before the end of the gas year in October.

The fast-paced drawdown during the months of November and December 2024 had a substantial impact, considering lower Russian pipeline gas deliveries were not sufficiently offset by higher LNG deliveries and low demand. The stockdraw amounted to 25 bcm over the past two months, while Russian pipeline gas deliveries were 5.3 bcm, down from the five-year average of 18.2 bcm, while LNG receipts were up marginally to 22.6 bcm.

Analysts project Europe stocks to hit around 40 bcm (37% full) by end-March, anticipating further reductions in Russian pipeline gas supply through the first quarter of 2025 and gradually rising gas demand.

The new US administration is pushing for deregulation and American energy dominance on global markets by fast-tracking permitting for LNG terminals and related infrastructure. Such policies are poised to boost oil and gas production and underpin US LNG export growth.

President-elect Donald Trump has already outlined a radical shift in US energy policies which is expected to spur investment in the upstream sector, as well as related pipelines to bring shale oil and gas from America’s major unconventional oil and gas basins to liquefaction terminals along the US Gulf Coast. Rising shale oil and gas production is bound to create a supply length and free up additional gas resources for liquefaction and export, as well as for the American downstream market, notably for the power gen and industrial sector, analysts at Rystad Energy reckon.

In his pro-energy agenda, Trump vowed to override and reverse Biden-era regulatory pauses on US LNG export projects and increase leases on federal land for fracking of unconventional oil and gas. If implemented, these policies could almost double US LNG export capacity from currently 11.3 billion cubic feet per day (Bcfd) in 2023 to 22.4 Bcfd in 2030 – especially if major projects like Texas LNG and Calcasieu Pass (CP2) move forward, analysts noted. CP2 attracted extra scrutiny from climate campaigners as the single largest LNG project proposed to date.

Such an expansion is deemed “crucial” for the United States to stay a major player in the global LNG market, where demand is forecast to reach nearly 600 million tons (Mt) in 2030. Based on currently producing and under-development projects, a supply gap of 140 Mt will materialize in 2035 – but considering the turn-around in US energy policy, Rystad Energy CEO Jarad Rystad is optimistic:

“We’re moving from a time of energy scarcity to a time of energy abundance,” he commented. Capacity additions in both fossil fuels and renewables will, in his view, outpace increases in demand in 2025.

Europe bargains for US LNG

Looking at the global supply picture, expanded US LNG production and exports could be used as a bargaining chip by the Trump administration in trade negotiations with Europe, Russia and other major economies in Asia.

“Europe is still searching for reliable, long-term alternatives to Russian piped gas and LNG supply, while China-US LNG trade is likely to be affected by tariffs,” said Rystad Energy’s head of North America Gas & LNG Research, Emily McClain.

European leaders have already hinted at using US LNG purchases as a bargaining tool to avoid potential trade tariffs under Trump’s administration. “By aligning energy policies and prioritizing US imports, Europe could secure a stable energy supply while fostering stronger transatlantic relations,” she suggested.

Trade tariffs 2.0 risk to push up energy prices

Trump has a legacy of levying trade tariff during his first administration which has been a great cause of concern about policy risks on the future cost of LNG and global trade. A 25% steel tariff, for instance – as implemented in 2018 –led to significant price increases for LNG projects. And this trend that could repeat under Trump 2.0.

Another trade war with China, meanwhile, could disrupt the flow of LNG between the two countries, just as it did in 2019 when LNG exports were halted. “Such tariffs would not only elevate capital expenses for LNG projects,” McClain warned, “[they would] also risk slowing contracting activity with key buyers like China, jeopardizing long-term export growth.”

On the other hand, there is a risk of oversupply on global LNG markets especially if multiple new US LNG projects move forward simultaneously. An oversaturated market could erode prices, disadvantaging US producers compared to competitors like Qatar and Australia, analysts noted. But reliable US supply would also unlock new demand, particularly from price-sensitive markets in Asia – if executed strategically.

Taiwan is one of the few markets in Asia where LNG demand is rising with a steady and substantial pace. Over 4.4 GW of new gas-fuelled power generation capacity is scheduled to start operations, underpinning LNG imports, while Taiwan’s law-making court is reviewing if the runtime of the final 951 MW unit at Maanshan nuclear power station can be extended.

Juxtaposing the carbon capture and storage (CCS) capacity with LNG production illustrates of the scale of the ambition for CCS, Wood Mackenzie says, comparing the growth of two large industrial systems handling gas in a cooled liquid state. “Even in the delayed energy transition scenario, CCS capacity is expected to be three times greater than LNG supply volumes by 2050," analysts noted, "while in the base case, it will be four times greater."

LNG is a controversial topic in Germany: Green paint was thrown at the back entrance of Berlin’s luxury Hotel Adlon at the opening day of the Global LNG Summit while Stefan Wenzel, state secretary to Germany’s economy minister Robert Habeck spoke just prior to a panel with top executives from Cheniere Energy, ADNOC Gas, Shell and bp.

Sembcorp Industries has entered a Sale and Purchase Agreement (SPA) with Chevron to import up to 0.6 million tons of LNG per annum over ten years, starting from 2028. Sembcorp has two gas-fired cogeneration plants, producing 1,219 MW of electricity and 1,000 tonnes of steam per hour on Jurong Island, where a hydrogen-ready plant is also under development.

Prices at the Dutch Title Transfer Facility (TTF), Europe’s most liquid gas trading hub, have risen due to a growing risk premium related to residual Russian flows or cold-weather events. The TTF Q1-25 contract is already pricing near the top of the coal–gas fuel-switching range in the power sector.