Natural Gas: The Demand War Reignites – From LNG and CNG to Natural Gas Vehicles

These days, you can't have a conversation in the energy sector without natural gas coming up. Just last year, the market was relatively quiet, overshadowed by the direction of oil prices – but this year, things have completely turned around. An unexpectedly long cold snap in the Northern Hemisphere has sent heating demand soaring, and at the same time, a scramble is on for liquefied natural gas (LNG) carriers for power generation. A month ago, the prevailing view was optimistic – 'we can manage with stockpiles' – but now, it's a whole different story.

The key is short-term spot prices for LNG. Last week, prices seemed to be steadying around US$14 per tonne, but then Japan and China announced March import volumes that were a whopping 12% above forecasts, and tensions are rising again. From my own on-the-ground reporting, even KOGAS is busy looking for additional spot cargoes for April and May, beyond its existing long-term contracts. Officials at the large LNG terminals in Tongyeong and Pyeongtaek note that "unloading schedules are already packed through mid-June."

But here's something we need to highlight: the role of compressed natural gas (CNG). Most people are focused on LNG, but for domestic gas distribution and small industrial complexes, CNG remains an efficient alternative. Especially for inland factories in Yeongdong and Honam that aren't connected to pipelines, the cost of supply via CNG trailers is now actually lower than re-gasifying liquefied gas. One energy manager at a central region auto parts maker smiled as he told me, "We're getting a better deal on CNG right now than when we negotiated our supply price earlier this year."

Why natural gas vehicles are back in the spotlight

This trend naturally flows through to the transport sector. Lately, enquiries about natural gas vehicles (NGVs) have jumped noticeably. With the EV chasm lasting longer than expected, the logistics industry is refocusing on practicalities like refuelling time and driving range. Did you know that over 30% of city buses in the Seoul and Gyeonggi region are already CNG buses? Add in the large trucks running on LNG, and the presence of NGVs is nothing to dismiss.

• Environmental regulations: As Europe's CBAM ramps up, exporters need to verify the carbon footprint of their supply chains. NGVs cut CO2 emissions by about 20% compared to diesel.
• Fuel cost stability: With international oil prices hovering around US$85 a barrel, the per-kg price of CNG is only about 40% of petrol. For any business, that's a no-brainer.
• Infrastructure: There are over 260 CNG stations operating nationwide, and LNG stations are expanding, centred on major logistics hubs.

Of course, there are hurdles. The upfront purchase cost is higher than diesel models, and the weight of storage tanks is still a sticking point. But looking at the pace of technological progress over the past three years, that gap is closing fast. A commercial vehicle development team contact at one automaker told me, "For our 2027 NGV models, we've managed to cut payload loss to under 5%."

Why oil and gas consulting is booming right now

Given this tangled web of pricing and supply chain risks, one service that's been gaining a lot of attention lately is oil and gas consulting. This used to be something only big corporate strategy offices or energy trading houses sought out, but now it's becoming a must-have for mid-sized manufacturers and logistics firms too. The reason is simple: there are far too many variables for anyone to predict on their own.

Good consulting doesn't just hand over data like 'what LNG prices are right now'. 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, one major Korean logistics company switched to a contract structure recommended by oil and gas consulting and cut its annual fuel bill by 15%. An executive there 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 comes down to one thing: '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 NGVs will unlock. 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 activity will keep it supported. Smart players will read this volatility as an opportunity – right now.