Global LNG Expansion Faces Structural Risks as Energy Transition Accelerates, Report Warns

SINGAPORE, April 15, 2026 – The global liquefied natural gas (LNG) sector is approaching a critical inflection point, with new analysis suggesting that a large wave of planned projects could face significant economic and structural risks as the energy transition accelerates.

A report by Climate Resource argues that the current build-out of LNG capacity may represent the “last train” of large-scale investments before demand growth slows or peaks, raising concerns over asset stranding and long-term viability.

Surging supply meets uncertain demand outlook

The report highlights a growing mismatch between projected LNG supply and demand trajectories.

A new wave of liquefaction capacity, particularly from the United States, Australia, and Qatar, is expected to come online over the next decade. However, demand growth is becoming increasingly uncertain due to structural shifts in energy systems, including the rapid expansion of renewables, electrification, and energy efficiency improvements.

Broader market data supports this trend. Global LNG supply is projected to expand sharply, potentially outpacing demand and leading to oversupply conditions in the coming years. At the same time, traditional demand centres such as Japan, South Korea and Europe are already experiencing declining or plateauing LNG imports as part of their decarbonisation strategies.

Asia remains central, but faces structural constraints

While Asia is expected to remain the primary growth market for LNG, the report points to significant constraints that could limit long-term demand expansion.

Emerging economies in Southeast Asia and South Asia face a complex mix of financial, policy and infrastructure challenges that could slow the uptake of LNG. These include high import costs, currency risks, and competition from increasingly cost-competitive renewable energy sources.

In many markets, solar and wind power are becoming more economically attractive than gas-fired generation, particularly in systems that are still building out their energy infrastructure.

Risk of stranded assets and capital exposure

One of the central concerns raised in the report is the potential for stranded assets. LNG projects are capital-intensive and typically require long-term contracts to ensure financial viability. However, as demand uncertainty grows and market dynamics shift, securing such contracts is becoming more challenging.

This creates the risk that newly built infrastructure, including liquefaction plants and import terminals, may not operate at expected utilisation levels over their lifetimes.

Recent market analysis suggests that a structural oversupply could emerge by the end of the decade, placing downward pressure on prices and project economics.

Changing role of LNG in the energy transition

The report also underscores the evolving role of LNG within the broader energy transition. While LNG has often been positioned as a “transition fuel”, its long-term role is increasingly being questioned as renewable energy deployment accelerates and storage technologies improve.

In some scenarios, LNG demand may peak earlier than expected, particularly in advanced economies where climate policies are tightening and alternative energy sources are scaling rapidly.

At the same time, proponents of LNG continue to argue that it will remain an important component of the global energy mix, particularly in regions where energy demand is growing and coal-to-gas switching remains a priority.

The findings have significant implications for policymakers, investors and industry stakeholders. For governments, the challenge lies in balancing energy security with long-term climate objectives, particularly in emerging economies where LNG infrastructure is still being developed.

For investors, the report highlights the importance of reassessing risk exposure in LNG projects, particularly in light of evolving demand scenarios and policy frameworks.

The shift also reinforces the need for more flexible energy systems that can adapt to rapid changes in technology, policy and market conditions.

The global LNG market is entering a period of heightened uncertainty, shaped by the interplay between energy transition dynamics and traditional supply-demand fundamentals.

While LNG is likely to remain part of the energy mix in the near to medium term, the scale and pace of future investments are expected to come under increasing scrutiny.

As the report suggests, the current wave of LNG projects may represent a narrowing window of opportunity, beyond which the economics of large-scale expansion could become significantly more challenging.