December 16, 2025 [Oil Price]- China’s LNG demand is disappointing in 2025 for a second year in a row, just as new U.S. export projects ramp up and Qatar is nearing start-up of the first new facilities in its huge capacity expansion.

The wave of new LNG supply that will come online by the end of the decade, mostly from the top exporters, the United States and Qatar, has prompted many analysts to expect an oversupplied LNG market by 2030 that would weigh on prices.

Lower prices could incentivize additional demand from price-sensitive buyers in south and Southeast Asia, but projects for nuclear capacity expansion in the world’s top LNG importers, China and Japan, could reduce demand for imported gas in the long term.

China could even launch the world’s first small modular reactor (SMR) as early as 2026.

If further tests and construction prove successful, a buyer’s market would give LNG importers new leverage in contract negotiations for long-term supply into the 2030s and 2040s.

“The question isn’t which technology prevails. The question is how Asian utilities reprice long-term contracts when two clocks—LNG expansion and nuclear validation—start running in parallel, each generating data that forces the other to justify its risk premium,” geopolitical risk analyst Güney Y?ld?z writes in Forbes.

We are years away from SMRs replacing any gas demand in China. But Japan is working to restart more of its nuclear reactors that were shut down for safety checks after the Fukushima disaster in 2011—potentially reducing demand for LNG in the resource-poor G7 nation.

Japan’s Prime Minister, Sanae Takaichi, favors accelerating the restart of nuclear reactors as a way to reduce the economy’s dependence on energy imports.

Before Fukushima, nuclear energy accounted for about 30% of Japan’s electricity mix. The disaster prompted the closure of all reactors for safety checks. Since 2015, Japan has restarted 14 reactors out of 33, while 11 others are currently in the process of restart approval, including two reactors at the Kashiwazaki-Kariwa nuclear power plant, the world’s largest in terms of nameplate capacity.

In the short term, analysts expect well-supplied and even oversupplied LNG markets amid lower Chinese demand while new supply comes online.

The U.S. is set to export 14.9 billion cubic feet per day of LNG this year, up by 25% from 2024, the Energy Information Administration (EIA) said in its latest Short-Term Energy Outlook (STEO) last week. With new projects ramping up, the EIA expects U.S. LNG exports to jump to an average of 16.3 billion cubic feet per day in 2026.

At the same time, China’s LNG imports have been falling over the past year as domestic production and pipeline imports increase.

Despite warnings of a near-term global LNG glut, top exporters in the Middle East, including Qatar and the United Arab Emirates (UAE), see strong demand going forward and flag insufficient investment in supply in the medium to long term.

The UAE is growing its LNG exports to meet surging global demand that will outpace investment in supply, Energy Minister Suhail al Mazrouei told Reuters last week.

“I agree with his excellency, Minister of Qatar, that the demand is going to be much, much more than the projects that we are seeing,” the UAE official added.

Earlier this month, Saad Sherida Al-Kaabi, QatarEnergy’s CEO and the Minister of State for Energy Affairs of Qatar, said that global LNG demand will grow, led by increased power needs from AI-related data centers.

“I have no worry at all about demand in the future. I have a worry about the lack of investment for additional supply in the future, which will cause prices to spike,” said Al-Kaabi.

Global supply is currently around 400 million tons of LNG annually, but demand will jump to 600-700 million tons by 2035, the Qatari official noted.

“That is an additional 200-300 million tons spearheaded by growth mostly in Asia, but also in the rest of the world, there is also something that we never counted on, whether in 2017 or even just a few years back, and that is artificial intelligence (AI),” Al-Kaabi told the Doha Forum in early December.