Asian shipbuilding dominance could thwart LNG expansion, Wood Mackenzie says

• South Korea and China control the vast majority of LNG carrier construction due to decades of technological investment and expertise, creating a critical supply chain dependency the LNG industry cannot quickly replicate.
• The report identifies an 'hourglass' system where global LNG supply and demand increasingly depend on a narrow transport link formed by carriers built in just two countries.
• Building alternative shipbuilding centers would require years of investment and tens of billions of dollars, making diversification of this critical infrastructure highly challenging in the near term.

Summary: Asian Shipbuilding Dominance Could Thwart LNG Expansion

A Wood Mackenzie report released July 8 warns that the record expansion of global liquefied natural gas (LNG) supply could face significant bottlenecks due to heavy dependence on Asian shipbuilders, particularly South Korea and China.

Key Facts and Figures:

• Over 260 LNG carriers are currently on order for delivery from 2027 onward
• Approximately two-thirds are being built in South Korea, with most remaining vessels under construction in China
• Alternative shipbuilding capacity would require years of investment and tens of billions of dollars to develop

Market Implications:

The report identifies a critical supply chain vulnerability in the LNG industry's infrastructure. Despite the sector's focus on energy security and diversification, its ability to physically transport gas depends entirely on a supply chain it neither controls nor can quickly replicate. This concentration creates risks of delivery delays and rising vessel costs.

Wood Mackenzie describes an "hourglass" system where expanding LNG supply from major exporters (United States, Qatar, Africa, and Australia) and growing demand in Europe and Asia must pass through a narrow transport link—the global LNG carrier fleet. Director of Research Ekram El Loumi emphasizes that South Korean and Chinese dominance stems from decades of technological investment and expertise that cannot be easily duplicated.

Strategic Concerns:

The report suggests that shipping capacity could become as critical as liquefaction project development itself. As the U.S. and Qatar lead the largest-ever LNG supply expansion, the industry's reliance on Asian shipyards represents a strategic vulnerability that could constrain growth and limit the effectiveness of diversification efforts in the global energy market.