The global market for Liquefied Natural Gas (LNG), with the support of secure energy and industrial demand, is looking at continued expansion. The industry is forecasted to grow from $143.35 billion in 2024 to $155.85 billion in 2025, according to TheBusiness Research Company. This reflects a Compound Annual Growth Rate (CAGR) of 8.7%. Looking further ahead, it is expected that the LNG market will reach $205.95 billion by 2029, exhibiting a CAGR of 7.2%, which is predominantly attributed to the global demand for cleaner energy. The demand for LNG is majorly fulfilled by the U.S., exporting around 88.3 million metric tons (MT), which is up by 4.5% from 2023, according to LSEG.
In contrast, the global market also has a major impact from Europe’s LNG demand. The region’s demand accounted for 55% of total LNG exports by the U.S. in 2024, according to LSEG. LNG shipments of 5.84 MT were sent to Europe by the U.S. in December 2024, which is up from 5.09 MT in the previous month.
This increased demand is driven by strong winters as well as supply-related issues from Russia. Previously, Europe imported LNG through Ukraine in 2024, while it is currently seeing increasing geopolitical issues. On the other hand, Asia’s LNG demand has also seen growth, making up 34% of the total LNG exports made by the U.S. in 2024. Accordingly, shipments to Asia rose to 2.01 MT in December from 1.64 MT in November (up by 24%).
However, the industry is currently facing challenges in the form of the U.S.-China trade war, under which China imposed a 15% tariff on the U.S. LNG, as U.S. President Donald Trump put a 10% charge on Chinese imports. While long-term commitments are significant, in 2024, China’s imports made up for only 5.5% (4.3 MT) of the total exports by the U.S., as per Kpler. It has been reported by Reuters that under 20-year agreements, Chinese buyers are to import 20 million tons per annum (MTPA) of LNG from U.S. terminals. However, ongoing issues may curb further contracts.
Thus, for short-term ease, the U.S. may rely on Europe’s demand, however, IEA predicts that the European gas demand will decline from 507 billion cubic meters (bcm) in 2023 to somewhere between 281 and 407 bcm by 2035, owing to its transition to renewable energy sources. On the other hand, China’s LNG demand is expected to grow and reach between 397 and 522 bcm by 2035.
Moreover, advancements in technology in liquefaction and regasification have helped in improving energy efficiency and in reducing methane emissions across the supply chain. Furthermore, offshore gas extraction has been enabled by floating LNG (FLNG) with minimal onshore infrastructure, which adds to flexibility in production. The global LNG liquefaction capacity by 2028 is expected to increase from 473 million tons per annum (MTPA) in 2023 to 968 MTPA by 2028 with the help of new projects as per BusinessWire. The expansion will be led by North America, making up for 54% of the total capacity increase.
Looking on to the other side, Australia also makes up for a key LNG player with over $126 billion invested in new and upcoming projects, as reported by Deloitte. These investments look to increase production capacity and help Australia secure long-term contracts amidst changing global demand.
Despite these developments, natural gas futures prices have increased by around 98.02% in the past six months. This is an increase from $1.956 on August 26, 2024 to $4.23, as of writing this article. This reflects on the high volatility of the market as well as evolving trade flows.
Methodology
To curate our list of the 10 Best LNG and LNG Shipping Stocks to Buy According to Analysts, we picked the top LNG companies having an exposure to LNG production and distribution. Furthermore, we made sure that we picked companies with strong market capitalization. Additionally, we looked into the number of hedge funds having a stake in the respective stocks, and made sure the hedge fund sentiment was positively strong for the respective stocks. Finally, we ranked the stocks based on the upside potential predicted by a healthy number of analysts, as of writing this article.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is BP p.l.c. (BP) The Best Oil Refinery Stock To Invest In According to Analysts?
A large turbine generating power from natural gas, smoke rising in the background.
BP p.l.c. (NYSE:BP) is a multinational energy company with major operations in oil and gas production, refining, and low-carbon energy related solutions. The company generates revenues through Gas & Low Carbon Energy, Customers & Products, and Oil Production & Operations, with a focus on improving efficiency and disciplined capital allocation.
BP p.l.c. (NYSE:BP) reported an underlying replacement cost (RC) profit of $1.2 billion in Q4 ended December 31, 2024, which is a decrease from $2.3 billion in Q3. This decline is a reflection of lower refining margins, higher turnaround costs, and lower fuels margin due to seasonality.
However, the company reported strong cash flow of $7.4 billion, with support from $1.3 billion of working capital release. Its net debt also reduced and stood at $23 billion, supported by $2.8 billion of divestment proceeds and strategic debt management. As a result, BP p.l.c. (NYSE:BP) announced an $0.08 dividend per share, and completed a share buyback at $1.75 billion. Looking ahead, the company plans to repurchase an additional $1.75 billion before Q1 2025 results are out.
Regardless of varied performance by BP, the company approved 10 new Final Investment Decisions (FIDs) and expanded into the markets of Iraq and India, emanating strategic progress. The company also reported plant reliability above 95%, which supports its upstream operations.
On January 2, 2025, BP p.l.c. (NYSE:BP) announced the start of gas supply from wells at the GTA Phase 1 Liquefied Natural Gas (LNG) project to its floating production storage and offloading (FPSO) vessel for the next stage of commissioning. The project is key to BP’s LNG expansion efforts, as it is expected to produce around 2.3 million tons of LNG per annum.
Thus, BP’s strategy through this new investment supports its growth target of 25 million tons per annum (MTPA) by 2025. Supplemented by strong cash generation and a stable balance sheet, BP looks to strengthen its financial position as it navigates through industry challenges to position itself as one of the best LNG stocks to buy right now.
Overall BP ranks 10th on our list of the best LNG and LNG shipping stocks to buy according to analysts. While we acknowledge the potential of BP as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
