Natural gas: the demand war reignites – from LNG and CNG to natural gas vehicles

These days, you can hardly have a conversation in the energy sector without the words ‘natural gas’ coming up. Last year the market was relatively quiet, overshadowed by the direction of oil prices – but this year, the situation has completely flipped. An unexpectedly long cold spell in the northern hemisphere has sent heating demand soaring, and at the same time a battle is raging to secure vessels for liquefied natural gas (LNG) used in power generation. A month ago, the prevailing view was an optimistic ‘we can manage with existing stockpiles’; now, it’s a very different story.

The key factor is the short-term spot price of LNG. It seemed to be steadying around $14 per tonne last week, but then import volumes for Japan and China in March were released the day before yesterday – beating expectations by a full 12% – and the tension is back. From my own on-the-ground reporting, even KOGAS (Korea Gas Corporation) is busy scouting for additional volumes beyond its existing long‑term contracts for April and May deliveries. Officials at the Tongyeong and Pyeongtaek terminals – major LNG hubs – tell me that unloading schedules are already packed solid through mid‑June.

But here’s something we need to look at more closely: the role of compressed natural gas (CNG). Most of the public eye is on LNG, yet for domestic gas distribution and small industrial complexes, CNG remains a highly efficient alternative. Particularly for factories in the inland regions of Yeongdong and Honam that aren’t connected to pipelines, the cost of supply via CNG trailers has actually become lower than re‑gasifying LNG. The energy manager at one automotive parts manufacturer in the central region smiled as he told me, “We’re getting an even better rate now than when we negotiated our CNG unit price earlier this year.”

Why natural gas vehicles are back in the spotlight

This trend naturally extends into transport. Recently, enquiries about natural gas vehicles (NGVs) have shot up. With the electric vehicle ‘chasm’ proving wider and longer than expected, logistics operators are refocusing on the practicalities of charging time and range. Did you know that over 30% of city buses in the Seoul and Gyeonggi area are already CNG buses? And when you add large trucks running on LNG, the presence of natural gas vehicles is far from negligible.

• Environmental regulations: As the EU’s Carbon Border Adjustment Mechanism (CBAM) ramps up, exporters must now provide evidence of carbon emissions across their supply chains. Natural gas vehicles cut CO₂ emissions by about 20% compared to diesel.
• Fuel cost stability: With international oil prices hovering around $85 a barrel, the price per kilogram of CNG is just 40% that of petrol. For any business, that’s a no‑brainer.
• Infrastructure: Over 260 CNG filling stations are already operating nationwide, and LNG stations are also expanding – centred on major logistics hubs.

Of course, there are still hurdles. The upfront purchase price of an NGV is higher than a diesel model, and the weight of the storage tanks remains a sticking point. But looking at the pace of technological progress over the past three years, that gap is closing fast. A source in the commercial vehicle development team at one automaker told me, “For our 2027 model year natural gas vehicle, we’ve managed to cut the payload loss to under 5%.”

Why crude oil and natural gas consulting is booming right now

Faced with such a tangled web of pricing structures and supply‑chain risks, one service that has recently come into its own is crude oil and natural gas consulting. Once the preserve of big corporate strategy offices and energy trading houses, this field has now become a ‘must‑have’ even for mid‑sized manufacturers and logistics firms. The reason is simple: there are far too many variables for any one company to predict alone.

Good consulting doesn’t just hand over a data point like ‘the current price of LNG’. Instead, it calculates the optimal blend of long‑term contracts versus spot purchases, based on each company’s consumption patterns, storage capacity, and risk appetite. One major Korean logistics group recently took advice from a crude oil and natural gas consulting firm and switched to a contract structure that cut its annual fuel bill by 15%. An executive there gave a thumbs‑up, saying, “They pointed out seasonal spreads and CNG blending options that we hadn’t even considered.”

In the end, the market’s current focus comes down to one question: ‘Which form of natural gas – and how do we secure it?’ From global LNG shipping volumes, to the regional strengths of CNG, to the future of logistics that natural gas vehicles are opening up. I expect domestic natural gas demand to grow by at least another 8% within the next six months – because even after winter ends, spring and summer cooling demand and industrial utilisation rates will keep the pressure on. Any smart player should read this turbulence as an opportunity, starting now.