The global liquefied natural gas (LNG) market is on a trajectory toward oversupply, posing the primary threat to the industry's stability in the coming years, according to TotalEnergies' chief executive, Patrick Pouyanné.
Speaking at the Gastech 2025 Conference, Pouyanné acknowledged the French supermajor's strategy of expanding its LNG portfolio, including a significant increase in its reliance on US suppliers. "We are today the largest exporter of US energy," he stated, adding that TotalEnergies plans to boost its US LNG offtake from the current 10 million tonnes to 18 million tonnes.
He did, however, highlight that with the U.S. bringing on so many new projects "there is a point where we'll face some oversupply." He added that while this would be "good news for customers," it would present a challenge for producers. This means that the price for LNG will likely come down as supply increases. This could pose a challenge to both LNG producers and for countries, like Trinidad & Tobago, where LNG exports are an important source of revenue.
Some recent projections show that overall natural gas use is expected to rise by more than 20% by 2050 compared to 2024 levels, and that the LNG market is projected to double by 2050 as it becomes an increasingly important part of that overall supply.
However, while demand is growing, there is also an anticipated surge in supply fueled by numerous projects scheduled to come online globally. Upstream reports that Fatih Birol, Secretary General of the International Energy Agency (IEA), noted that the United States, Qatar, and Canada alone will add a combined 300 billion cubic metres (220.5 million tonnes) of additional LNG capacity through 2030.
Pouyanné also noted that as the price of LNG goes down, it can become competitive with the price of coal in key growth markets, including China, where softer prices could trigger a shift from coal and diesel to natural gas. This transition, he believes, would create a new foundational demand base, ultimately supporting the next supply cycle in the coming decades.
The potential future decline in LNG prices raises key considerations for a country like Trinidad and Tobago, where short-term prices of energy commodities have a direct relation to the revenue earned by the government through taxes and other revenue. LNG is Trinidad & Tobago's major export and source of foreign exchange. Since the Russian invasion of Ukraine and Europe's moves to stop imports of Russian pipeline gas, LNG prices in both Europe and Asia have been at historically high levels. European and East Asian LNG import prices are currently over US $ 11.00 per mmsf compared to the US Henry Hub benchmark price of under US$3.00. The renegotiated Atlantic marketing arrangements means that Trinidad & Tobago's wellhead gas prices reflect these high Asian and European LNG prices, however, future LNG price decreases could put further strain on government revenue and foreign exchange earnings.
This potential for declining LNG prices highlights the importance of a national policy where there are a range of difference export routes for our natural gas, rather than relying solely on LNG. Maintaining a portfolio of different routes to monetise gas is an important strategic national policy consideration, underlining the importance of ensuring that there is a diversity of downstream gas processing facilities in the country, including petrochemicals such as methanol and ammonia. This means that there is a broader portfolio of export commodities and potentially provides some greater stability in export earnings and government revenue.