Natural gas demand war reignites... From LNG and CNG to natural gas vehicles

These days, if you work in the energy sector, you can’t go a day without hearing the words ‘natural gas’. Until last year, the market was relatively quiet, overshadowed by the direction of oil prices. But this year, things have turned completely around. An unexpectedly long cold snap across the northern hemisphere has caused heating demand to explode, and at the same time, a scramble is underway to secure vessels for liquefied natural gas (LNG) used in power generation. Just a month ago, the prevailing view was optimistic – ‘we can manage with existing stocks’ – but now the story is very different.

The key factor is the short-term spot price of liquefied natural gas (LNG). It seemed to be stabilising around $14 per tonne last week, but then news broke that March imports by Japan and China exceeded forecasts by 12%, sending tensions rising again. From my own reporting on the ground, KOGAS is also busy looking for additional volumes for April and May beyond its existing long-term contracts. Officials in the Tongyeong and Pyeongtaek areas, where large LNG terminals are located, tell me that “unloading schedules are already fully booked until mid-June”.

But here’s something we need to highlight: the role of compressed natural gas (CNG). While most of the public’s attention is on LNG, CNG remains an efficient alternative for domestic gas distribution and small industrial complexes. In particular, for inland factories in Yeongdong and Honam that aren’t connected to pipelines, the cost of supply via CNG trailers has actually become lower than regasifying LNG. One energy manager at a auto parts manufacturer in the central region smiled as he said, “The current CNG unit price is actually more favourable than when we negotiated it earlier this year.”

Why natural gas vehicles are back in the spotlight

This trend naturally flows into the transport sector. Recently, inquiries about natural gas vehicles have jumped noticeably. With the electric vehicle ‘chasm’ lasting longer than expected, logistics companies are refocusing on practical concerns like refuelling time and driving range. Did you know that over 30% of city buses in the Seoul and Gyeonggi area are already CNG buses? And when you include heavy-duty trucks that run on LNG, the presence of natural gas vehicles is anything but negligible.

• Environmental regulations: As the EU’s Carbon Border Adjustment Mechanism (CBAM) ramps up, exporting companies must verify the carbon footprint of their supply chains. Natural gas vehicles cut CO2 emissions by around 20% compared to diesel.
• Fuel cost stability: With international oil prices flirting with $85 a barrel, the price of CNG per kilogram is only about 40% that of petrol. For anyone running a business, that’s hard to ignore.
• Infrastructure: There are over 260 CNG refuelling stations nationwide, and LNG stations are also expanding, mainly around key logistics hubs.

Of course, challenges remain. The upfront purchase cost is higher than diesel models, and the weight of storage tanks still poses a problem. But looking at the pace of technological progress over the last three years, the gap is closing fast. A commercial vehicle development official at one automaker revealed, “For the 2027 natural gas vehicle model, we’ve succeeded in reducing payload loss to less than 5%.”

Why crude oil and natural gas consulting is booming now

With such a tangled web of pricing structures and supply chain risks, one service that’s been gaining a lot of attention recently is crude oil and natural gas consulting. This used to be something only sought out by large corporate strategy offices or energy trading houses, but now it’s becoming a ‘must-have’ for mid-sized manufacturers and logistics firms. The reason is simple: there are far too many unpredictable variables for any one company to handle alone.

Good consulting doesn’t just throw data at you, like ‘the current price of LNG is X’. Instead, it calculates the right mix of long-term contracts and spot purchases based on each company’s consumption patterns, storage capacity, and needs. Recently, a major logistics firm here followed advice from crude oil and natural gas consulting and switched to a contract structure that saved them 15% on annual fuel costs. An executive at the company gave a thumbs up, saying, “They pointed out seasonal spreads and CNG blending options we had no idea about.”

In the end, the market’s big question boils down to one thing: ‘What form of natural gas should we secure, and how?’ From global LNG cargo flows to the regional strengths of CNG, and 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. Even after winter ends, spring and summer cooling demand and industrial operating rates will keep it supported. Any smart player should read this turmoil as an opportunity – right now.