US LNG expansion: Balancing growth ambitions with oversupply risks

The global liquefied natural gas market stands at a crossroads. Whilst consensus has emerged that gas remains essential for energy system stability, the scale and timing of new supply additions could determine whether the industry thrives or stumbles in the coming decade.

The United States has positioned itself as the dominant force in this expansion. With abundant domestic gas resources, multiple projects recently taking final investment decisions (FID), and supportive federal policies, US LNG has captured unprecedented investment momentum. Yet beneath this success story lies a growing concern. The sheer volume of capacity under development raises fundamental questions about market balance and the risk of prolonged oversupply.

Global demand drivers remain robust

The case for expanded LNG supply appears compelling across key markets. European gas demand has proven resilient despite the energy crisis, whilst domestic production continues its structural decline. The European Union's commitment to eliminate Russian gas imports by 2028 creates an additional supply gap that LNG must fill.

Asian markets present equally strong fundamentals. Lower prices will enhance LNG's affordability and potentially trigger the next phase of demand growth. Regional supply constraints are intensifying as South and Southeast Asian domestic gas production dwindles. Egypt's recent experience—turning to LNG when pipeline imports were severed—demonstrates how quickly markets can pivot to liquefied gas.

For buyers seeking new supply, alternatives to US LNG remain limited. Qatar, the other global heavyweight, offers scale but limited near-term expansion. Projects elsewhere face persistent challenges: securing long-term gas supply, obtaining regulatory approval, and managing elevated costs. Political considerations add another dimension, with US LNG offering potential solutions to trade imbalances.

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In this report, we explore:

• Capital market enthusiasm for US LNG investments

• Warning signs including softening Chinese demand

• Rising supply-demand imbalances and oversupply risks

• Winners and losers across the value chain

• The need for industry recalibration

ADIPEC 2025

This content was originally promoted at ADIPEC, 3–6 November, Abu Dhabi. 

As an official Knowledge Partner of ADIPEC 2025, Wood Mackenzie brought unparalleled analysis, data, and perspective to the global dialogue on the future of energy. Our experts hosted an exclusive Leadership Roundtable, moderated multiple conference sessions, and shared their insights on the pivotal issues shaping the industry’s next phase of transformation.