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

These days, if you're in the energy industry, you can't go a day without hearing about natural gas. Until last year, the market was relatively quiet, overshadowed by where oil prices were heading. But this year, the situation has completely flipped. An unexpectedly prolonged cold spell in 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 stockpiles" – but now, it's a completely different story.

At the heart of it all is the short-term spot price of LNG. It seemed to be stabilising around US$14 per tonne last week, but then news broke that Japan and China's March import volumes came in 12% above expectations, sending jitters through the market again. From my own on-the-ground reporting, KOGAS is also busy scouting for additional cargoes for April and May beyond its existing long-term contracts. Officials at the large LNG terminals in Tongyeong and Pyeongtaek note that "the unloading schedule is already packed through mid-June."

But here's something important to note: the role of compressed natural gas (CNG). Most people are focused solely on LNG, but for domestic gas distribution and smaller 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 has actually become 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 our CNG supply now than when we negotiated the unit price earlier this year."

Why natural gas vehicles are getting attention again

This trend naturally flows into the transport sector. Lately, enquiries about natural gas vehicles have jumped noticeably. As the EV chasm period drags on longer than expected, the logistics industry is refocusing on practicality – charging time and driving range. Did you know that over 30% of city buses in the Seoul and Gyeonggi area are already CNG buses? Add to that the large trucks running on LNG, and the presence of natural gas vehicles is nothing to dismiss.

• Environmental regulations: With the EU's Carbon Border Adjustment Mechanism (CBAM) ramping up, exporters need to prove the carbon footprint of their logistics chain. Natural gas vehicles cut CO2 emissions by about 20% compared to diesel.
• Fuel cost stability: With international oil prices hovering above US$85 per barrel, the per-kg price of CNG is only about 40% that of petrol. For any business owner, that's a no-brainer.
• Infrastructure: Over 260 CNG stations are operating nationwide, and LNG stations are also expanding, especially around major logistics hubs.

Of course, there are hurdles. The upfront purchase cost is higher than diesel models, and the weight of the storage tanks remains an issue. But looking at the pace of technological progress over the last three years, that gap is closing fast. A commercial vehicle development team member at one automaker shared, "For our 2027 model year natural gas vehicle, we've managed to reduce payload loss to under 5%."

Why oil and gas consulting is heating up now

Given this complex web of pricing structures and supply chain risks, one service that's recently been gaining a lot of traction is oil and gas consulting. This was once a field that only large corporate strategy offices or energy trading houses would tap. Now, it's becoming a "must-have" even among mid-sized manufacturers and logistics firms. The reason is simple: there are just too many unpredictable variables for anyone to go it alone.

Good consulting doesn't just hand you data like "the current LNG price is X." Instead, it helps calculate the right mix of long-term contracts versus spot purchases based on your company's consumption patterns and storage capacity. Recently, a major Korean logistics company revamped its contract structure on advice from oil and gas consulting, saving 15% on its annual fuel bill. An executive there gave a thumbs-up, saying, "They pointed out seasonal spreads and CNG blending options we never even knew about."

So the market's big question boils down to one thing: "Which form of natural gas, and how do we secure it?" From global LNG cargo volumes to CNG's regional strengths, and the future of logistics that natural gas vehicles will unlock – I expect domestic natural gas demand to grow by at least another 8% over the next six months. Because even after winter ends, spring and summer cooling demand and industrial operating rates will keep supporting it. Smart players should read this disruption as an opportunity – starting now.