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As the supplier of 30% of Asia’s liquefied natural gas (LNG), Australia is expected to benefit from a forecast surge in regional demand for the fuel source. With new supplies coming online through ASX bluechip leaders like Woodside Energy (ASX:WDS) and Santos (ASX:STO), predictions of a major surge in Asian LNG demand may be a turning point for one of Australia’s leading export earners.
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Leading insights specialist for the energy sector, Wood Mackenzie, has forecast Asian LNG demand to increase by more than 10 million tonnes in CY26.
“All eyes will be on China. We anticipate gas demand to grow by +5%, supported by major infrastructure projects and a modest real estate recovery,” senior research analyst Maoping Hu wrote in his new report, Global Gas & LNG: Five Things to Look For, which Wood Mackenzie published early this year.
Hu wrote: “Firmer Asian demand will prove critical over the next years to absorb the wave of new supply. We remain positive about demand growth… but how quickly demand will respond to declining LNG prices remains a risk.”
The CY26 predictions are a major about-face for an LNG industry that was hit by lower prices and buying support in 2025. Wood Mackenzie reported that Asian LNG demand had contracted sharply in CY25, with volumes expected to decline by more than 12Mt year-on-year, or ~4.5% compared to CY24.
“A mild winter at the [start] of the year, high LNG prices, and U.S. tariffs all contributed to the downside, with China declining by around 10Mt,” Hu wrote.
The most recent Resources and Energy Quarterly (REQ) published by the federal Department of Industry, Science and Resources (DISR), noted that Australia’s LNG export volumes are expected to remain steady over the next two years, with most development investments proceeding as scheduled.
The report also noted there were several positive Australian-based gas and LNG developments in late CY25. This included Woodside receiving final environmental approval for its North West Shelf Project Extension, which should maintain output at the site into the 2030s. The Scarborough and Pluto Train 2 Projects, also operated by Woodside, passed 91% completion at the end of Q3 CY25.
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