2022 LNG Buyer Survey: Adapting to an uncertain future

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The 2022 liquefied natural gas (LNG) market faces significant uncertainty, with forecasts showing a tight market and elevated prices for at least the next two to five years. Meanwhile, buyers face uncertainties over the role of LNG in the energy transition and how to best position themselves for the transition to lower-carbon fuels.1Global Energy Perspective 2022, McKinsey, April 26, 2022.

Many buyers are also concerned about supply shortages and security of supply following several years of ample supply and a generally shared perception that they could rely on a functioning market. Today, however, buyers are reverting to longer-term contracts and prioritizing bilateral relationships with suppliers.

With these points in mind, McKinsey recently completed its 2022 LNG Buyer Survey to assess how buyer needs and attitudes are evolving around the world (see sidebar, “About the survey”).

Demand: Confidence varies by region

Buyers, particularly in China, are optimistic about short- and long-term demand for liquefied natural gas because of the energy transition and regulatory support

Evolving commercial and contractual expectations: Buyers are losing confidence in the spot market and are valuing longer-term contracts and relationships

Compared with previous survey results, buyers are targeting a greater share of long-term volumes, reversing a trend toward spot and short-term volumes

Supply: Managing emissions and pursuing innovation can differentiate sellers

A majority of buyers believe that suppliers can provide supply security

Summarizing our survey results, the LNG market has shifted toward a focus on supply security and a return to long-term contracts. However, other criteria, such as flexibility, pricing innovation, and emissions management, remain important. Overall, sellers that can effectively differentiate and meet specific buyers’ needs stand the best chance of successfully riding out this volatile wave and leading into the next industry cycle.

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