Fewer new LNG commitments will be made in 2025, says global consultancy Wood Mackenzie

There will be fewer global LNG final investment commitments this year, which should ease the concern of giants like Woodside and Santos of a global glut, a respected industry observer says.

There will be fewer global LNG final investment commitments this year than there were in 2024 as prospective developments are hindered by rising costs and a service sector squeeze, a major global consultancy has forecast.

The outlook could temper some expectations of a near-term global glut of LNG, which would pressure global prices – an outlook that looms over major producers such as domestic players Woodside and Santos.

The Wood Mackenzie forecast also counters the view that incoming US president Donald Trump will usher in a wave of new production. Mr Trump declared during his campaign that the US would “drill, baby, drill” – a vow that some analysts feared could spur a global oversupply.

Wood Mackenzie head of upstream analysis Fraser McKay said he expected a reduction in the numbers of new projects approved but cautioned that a US-China trade war could alter the forecast.

“We expect 2025 to be a quiet year for upstream LNG FIDs. This is, in part, due to service sector squeeze and rising costs, but that doesn’t mean projects won’t progress,” Mr McKay said.

APLNG’s 1000th cargo of LNG leaving Gladstone Harbour.

“A wildcard might come from US tariffs, which could force China to retaliate, such as importing less US LNG, making new project approval acceleration a moot point.

“Asian LNG buyers could acquire US lower 48 upstream gas positions as part of wider value-chain plays.”

While new approvals may be low, Mr McKay said projects already approved would begin to hit the market this year – led by the US. Despite concerns around near-term oil demand and potential oversupply, projects in the Americas would deliver relatively robust growth of roughly one million barrels per day in 2025, Wood Mackenzie said. This was the same level as 2024.

Increased world production would add pressure to global prices, which have in recent years been relatively robust.

Strong demand is expected to continue as countries move to meet emissions targets by curbing use of coal – a key rationale for companies like Woodside and its commitment to rapid expansion.

But some analysts are concerned Woodside is committing significant sums to expansion at a time when prices could fall.

Woodside briefly explored a merger with Santos, but Wood Mackenzie expects continued interest in consolidation.

Wood Mackenzie vice-president of upstream research Robert Clarke said interest in new deals was strong but it would not reach the levels seen recently.

“We will still see plenty of activity in the US as independents look to expand in markets outside of the Permian,” Mr Clarke said.

“Euro and US majors will also be keen to bolster post-2030 cashflow. Mega deals are possible but rare. “Many (national oil companies) will continue to be active, most notably in the Middle East, China and Southeast Asia.”

Originally published as Fewer new LNG commitments will be made in 2025, says global consultancy Wood Mackenzie