Natural gas is a combustible fossil gas consisting primarily of methane, which plays a key role in the global energy supply. As a flexible bridge between coal and renewable sources, it is used in power plants, households and industry, and is also gaining international importance as liquefied natural gas (LNG) in global trade and in maritime propulsion systems.
Source: Stockdio*
After a period of extreme price fluctuations, the global gas market is moving into a cautious equilibrium in 2025. The high fill levels of European underground storage facilities reached last winter are having a certain dampening effect on prices, but the relationship between supply and demand remains fragile. The IEA’s latest quarterly report describes that demand growth is expected to fall to around 1.5% in 2025, while new LNG capacities will only bring noticeable relief from 2026. In Asia, China remains the most important growth driver, although the pace is slowing; in Europe, politically driven decarbonization programs are facing continued demand in electricity and process heat generation. This means that the risk of renewed price spikes in the event of cold waves or supply interruptions remains.
Natural gas combines high energy density, flexible transport options and comparatively low CO₂ emissions per kilowatt hour generated. As a result, the raw material covers a broad range of applications, from power generation to space heating and chemical feedstocks. In liquefied form, LNG also enables the supply of remote regions and its use as an alternative fuel in heavy-duty and maritime transport.
Gas-fired power plants supply base and peak load power and can be started up or shut down quickly. In combined heat and power plants, process and district heating that can be used in parallel is generated. Compared to coal, up to 50% less CO₂ emissions are produced, which makes natural gas attractive as a bridging technology in transition phases of the energy system. In addition, plant investments are moderate and approval times are relatively short compared to coal projects.
In energy-intensive industries such as glass, steel, paper and food, natural gas burners provide precisely controllable process heat up to well over 1,000 °C. Thanks to high flame temperatures and clean combustion, product qualities can be improved and exhaust gas purification systems can be reduced in size. Many plants are already designed for future admixtures of hydrogen, which offers long-term flexibility with regard to climate targets and secures investments.
A significant proportion of global natural gas production serves as a raw material for methanol, ammonia and hydrogen. Synthesis gas is produced via steam reforming or partial oxidation, which is the basis for numerous organic compounds such as urea, plastics or solvents. The petrochemical industry benefits from constant specifications and high availability, which creates planning security for large-scale plants and maximizes economies of scale.
Liquified Natural Gas (LNG) is increasingly powering container and cruise ships because it drastically reduces sulfur and particulate emissions. In heavy goods traffic on the road, compressed natural gas (CNG) and bio-CNG are expanding the range of alternative drives. Ranges of over 1,000 kilometers and short refueling times facilitate use in logistics fleets and measurably and sustainably reduce operating costs.
Decentralized gas engines and turbines take over the safeguarding of critical infrastructures in hospitals, data centers or industrial parks. Thanks to their fast start, they supply electricity and heat within a few seconds when the public grid fails or peak loads occur. The modular design enables capacity expansions without lengthy planning processes and minimizes downtime risks for companies with high supply sensitivity.
Natural gas combines high energy density, flexible transport options and comparatively low CO₂ emissions per kilowatt hour generated. As a result, the raw material covers a broad range of applications, from power generation to space heating and chemical feedstocks. In liquefied form, LNG also enables the supply of remote regions and its use as an alternative fuel in heavy-duty and maritime transport.
On the supply side, North America continues to dominate: Since 2023, the USA has been the world’s largest natural gas producer and is continuously expanding its LNG export capacity. Canada is also benefiting from extensive shale reservoirs, while Mexico is importing growing volumes for electricity generation. In Eurasia, Russia remains an important supplier for Asian markets despite Western sanctions, particularly via the Power of Siberia pipeline to China. Qatar and Australia are competing for the top position in LNG deliveries, both investing in mega-projects such as North Field East and Scarborough respectively. Norway secures Europe’s supply via flexible offshore fields in the North Sea, while Algeria and Nigeria serve important export axes to southern Europe. Larger new discoveries in Mozambique and Namibia could generate further supply from the end of the decade.
On the demand side, the European Union continues to rank among the largest importers, even though efficiency measures and the expansion of renewable energies are expected to dampen gas consumption in the long term. Japan and South Korea remain stable, albeit slightly declining, LNG buyers, carefully balancing security of supply and nuclear energy policy. In China, natural gas is being promoted in the urban heating market and as a coal substitute in industrial boilers; the country covers more than 40% of its needs through imports. India and Southeast Asia are showing double-digit growth rates, driven by electrification projects and petrochemical expansion. In Latin America, Brazil and Chile use LNG as a flexible complement to hydrologically fluctuating hydropower. As a result, the focus of demand growth is increasingly shifting to emerging and developing countries.
Private investors can participate directly in natural gas price movements via futures exchanges such as the CME Group, for example using Henry Hub futures or options. Broadly diversified energy ETFs that map both producers and midstream companies are suitable for less risk-averse investors. Certificates and ETCs also provide synthetic access without physical delivery and can be traded cost-effectively.
However, an investment in natural gas remains associated with considerable risks: Price fluctuations result not only from demand impulses, but also from weather events, storage reports and geopolitical developments. At the same time, structural trends such as the global coal phase-out and the expansion of LNG capacities open up opportunities. Investors should therefore limit position sizes and carefully consider currencies and the interest rate environment.
At the most important trading centers such as Henry Hub (USA) or TTF (Netherlands), continuous bids and offers form the spot and forward price. Influencing factors include production costs, inventories, weather, exchange rates and geopolitical risks. Contracts are usually quoted in MMBtu or MWh, with transport costs incurred separately.
LNG is liquefied natural gas, which is compressed to around 1/600th of its gas volume at around −162 °C. This allows it to be transported globally in specially insulated tanks by ship. Pipeline gas, on the other hand, is transported under moderate pressure via land or submarine pipelines. After regasification, the chemical composition is identical for end consumers worldwide.
Natural gas is considered a transitional energy source because its combustion causes about 40–50% less CO₂ per kilowatt hour than hard coal. Flexible gas turbines can compensate for weather-dependent fluctuations in wind and solar feed-in. In the long term, however, climate paths foresee a significant reduction, including through hydrogen admixtures, the expansion of CCS technologies and efficiency improvements in industry and buildings.
Europe’s supply is based on a diversified portfolio of Norwegian pipeline gas, LNG imports from the USA, Qatar and Nigeria, and growing deliveries via terminals on the North and Baltic Seas. Strategic storage facilities typically cover 25–30% of annual consumption. Risks exist primarily in the event of extreme cold periods or unexpected infrastructure failures within Europe.
Complete combustion mainly produces carbon dioxide and water vapor; the sulfur and nitrogen oxide content is significantly lower than that of oil and coal. However, methane slip along the production and transport chain can reduce the climate advantage. Modern plants therefore rely on closed flare systems, leakage monitoring and catalytic aftertreatment to further reduce emissions and continuously monitor them.
Source: Stockdio*
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