Ten takeaways from WoodMac’s LNG Conference

We hosted Wood Mackenzie’s fourth annual Gas and LNG Conference in London over two days earlier this week. Discussions with our senior guests raised numerous talking points, indicating what the wider industry is thinking at this critical juncture. Here are our 10 takeaways:

1. The crisis, complacency and the risk of higher near-term prices. We found no consensus on when the crisis in the Gulf will be resolved. Prices will remain elevated come what may for the next 18 months, with the absence of damaged Qatari capacity and delays on projects under construction keeping the market tight. However, there is a sense of complacency subduing prices today below where they should be on the assumption that exports will resume soon. If they don’t, then upward price pressure will intensify as winter 2026/27 looms. 
2. Positive vibe for the medium term. There was near unanimity that LNG will remain central to the global energy mix beyond the crisis. Wood Mackenzie’s forecast that demand will grow by almost 60% by 2035 – up to 690 Mtpa – assuming a swift resolution of the conflict didn’t attract any pushback from guests. Suppliers were less enthused by our ‘extended disruption’ scenario, with demand growth of 45%. The positive vibe reflects LNG’s proven adaptability, having flourished after the Covid and Russia/Ukraine crises. Following the current crisis, the industry’s focus will be on building resilience to withstand future disruption. The supply chain has to shift from ‘just in time’ to ‘just in case’ – meaning more supply diversity and flexibility, more storage, more shipping capacity and, inevitably, more cost. 
3. Oversupply and the importance of affordability. The arrival of 250 Mtpa of new capacity coming onstream over the next five years will usher in a period of oversupply and lower prices. Affordability was a key theme for discussion, essential if demand growth in suppliers’ target markets – developing countries such as India – is to be realised. 
4. China’s changing role. A lack of LNG demand growth early this year doesn’t signal that China’s interest is waning – indeed it’s been back in buying again through May. But its role continues to transition from market sink to ‘market balancer’. Armed with an energy system fed by diversified fuel sources, China will generally sell contracted LNG back into the market when prices are high, as it was through April 2026, and switch to other gas sources or coal. When prices are low, it will buy more LNG. We continue to expect China to be the foundation stone for market growth into the next decade. 
5. Supply diversification. No surprise that some buyers want to diversify away from the Middle East, but it’s too early to pick the favoured sources. Geographical proximity, political stability, and government-to-government relationships will be important, while for the wealthier economies, security of supply and reliability will trump price up to a point. The US offers scale, though concentration risk is a concern for some buyers. Mozambique, Argentina and Canada are among the other leading alternative sources to the Middle East, with an Australian renaissance a possible wildcard. Floating LNG is increasingly a development theme. 
6. Middle East alternative export routes. Gulf states are looking for alternative export routes to circumvent the Strait of Hormuz in future crises. Oman is a clear contender for gas, with the Dolphin pipeline contract, which delivers Qatari gas to the UAE and Oman, set to end in 2032. In principle, sending gas to Oman looks relatively straightforward; investment in liquefaction capacity, ownership and operating the downstream, less so. More likely is additional investment in LNG capacity outside of the region by the leading protagonists. 
7. Henry Hub. Much heated discussion on the upside risks to US gas prices, and the implications for global LNG prices. The Wood Mackenzie view is that a powerful combination of rising LNG exports and soaring demand for power from mushrooming data centre build-out will drive up Henry Hub to just under US$5/mmbtu (real) by 2035. One observer challenged the impact data centres will have on gas demand. Moreover, US LNG developers argued that the depth and quality of remaining shale resource and productivity gains will keep Henry Hub prices modest, securing US LNG as the marginal cost production for the foreseeable future. Another point well-made was that Henry is the high price US benchmark, with cheaper options available across North America, not least in Canada. 
8. Finance’s new gorilla. Capital is there for the LNG value chain in a post-ESG world, other than for upstream. Sources continue to evolve. Private equity has retreated but there is a new 800-pound gorilla: private credit, leveraging its in-house insurance assets. Canadian pension funds have returned, with a similar appetite to finance large-scale projects. Discussion around ESG generally was notable for its absence – apart from continued concern around how looming European Methane legislation would hit the bloc’s LNG importers. 
9. LNG corporate shape shifting. The LNG ecosystem continues to grow with new entrants including US independents, national oil companies and early-stage international players. One observer suggested the sector is ripe for an upping of M&A activity – portfolio high-grading by the bigger players providing an opportunity for smaller companies to scale up, larger new entrants looking for corporate acquisitions and Majors demonstrating hidden value and tapping into external capital (not least, private credit) by spinning off LNG infrastructure. 
10. Trading – more money to be made. Bigger companies differentiate between trading, portfolio management/optimisation on the one hand, and old-fashioned risk management on the other. Another distinction was made between two types of volatility: ‘Good Vol’ when traders can make money, and ‘Bad Vol’ – like in the current crisis – when unexpected geopolitical decisions create excessive volatility, which is near-impossible to trade. High profitability in LNG trading, as reported by the Majors, is attracting more participants. The view among incumbent traders is that there is room for new players in a growing market and that we are some years away from a truly commoditised market. 

Thanks to Massimo Di-Odoardo, Frank Harris, Kristy Kramer, Ed Crooks and Giles Farrer.

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