In this article, we discuss the top 20 natural gas-producing countries in the world. To skip the detailed analysis of the recent events in the natural gas industry, go to the Top 5 Natural Gas Producing Countries in the World.
Natural Gas Market in 2022
The global natural gas market went through staggering changes since the Russian invasion of Ukraine. The bans on Russian imports by the US and EU led to an energy crisis in Europe because 39.2% of natural gas exports to Europe were through Russian pipelines. Russia has in turn blamed the West for the energy crisis and retaliated by shutting down supplies to three of its major pipelines that were supplying gas to Europe. The Russian piped gas supplies to Europe dropped by almost 50% YoY in 2022, recording the highest decline since the mid-1980s.
The plan to cut off Russian imports didn’t have the expected effect on the Russian economy as the country has directed its oil supplies towards the Eastern countries and plans to supply natural gas to China. The plan is yet to be implemented as it will take significant time and investment to build pipelines toward China. Moreover, the International Monetary Fund had previously estimated that the Russian economy would contract by 2.3%, but earlier this year, the IMF changed its expectations and estimated that it will grow by 0.3% instead.
To make things worse for Europe, in September 2022, the US said that it won’t be able to offset the drop in supply for winter due to its exports hitting a maximum. On top of that, Southern Europe experienced low rainfall which declined the energy produced by hydropower. However, Europe got a little lucky with the mild winter weather and healthy LNG inflows and the natural gas energy shortages weren’t as consequential as expected. Overall in 2022, Europe experienced a drop of 13% in natural gas demand. The highest decline in demand was experienced in the third quarter of 2022 and trade volumes decreased by 25% year-over-year. This decline in demand came after natural gas prices hit their highest in the EU at slightly over $70 per million British Thermal Units (MMBtu) in August.
In 2022, the global LNG volumes increased by 5.5%, yet due to high prices compared to the previous year, the trade value increased by almost 100% to $450 billion as the spot prices increased substantially due to the Russia-Ukraine conflict.
Gas Market Outlook
According to the IEA, natural gas consumption in the US is expected to decline by 2% in 2023 due to lower electricity demand and the country’s focus on increasing energy production through renewable sources. By the end of the first quarter of 2023, US natural gas consumption was expected to be around 99.1 billion cubic feet per day, representing a 5% decline YoY due to mild temperatures. Residential and commercial consumption is expected to decrease 11% YoY.
Additionally, the global LNG trade volume is expected to increase by 4.3%, owing to the increase in European exports by roughly 6360 billion cubic feet. According to The Business Research Company report, the global natural gas market is expected to reach $1.026 trillion in 2023 from $955.74 billion in 2022. By 2027, the global natural gas market is expected to reach $1.37 trillion, registering a CAGR of 7.5%.
With the global rise in demand for natural gas, the most notable stocks in the natural gas industry are Chesapeake Energy Corporation (NASDAQ:CHK), EQT Corporation (NYSE:EQT), and Pioneer Natural Resources Company (NYSE:PXD). These three stocks have a TTM PE ratio lower than their peer average of 10.1x and also have a decent hedge fund sentiment according to Insider Monkey’s database of 943 elite hedge funds.
Our Methodology
We compiled a list of top natural gas-producing countries according to 2021 data provided by the US Energy Information Administration on the total volume of dry natural gas produced by each country in the year. We used 2021 data as a lot of countries have not provided their 2022 data yet. The countries are listed in ascending order of their annual production.
Top 20 Natural Gas-Producing Countries in the World
20. Pakistan
Production in 2021: 1,179 billion cubic feet
According to the US International Trade Administration, around 38% of Pakistan’s primary energy supply mix is covered by natural gas. It produces 4 billion cubic feet per day on average, compared to its demand of 6 to 8 billion cubic feet per day. According to the EIA, Pakistan has huge shale gas reserves but their potential is hard to reach due to geography, water scarcity, security issues, and low natural gas prices in the country.
19. Thailand
Production in 2021: 1,284 billion cubic feet
Thailand is a hydrocarbon-producing country but due to its high energy demand, it is a net importer of oil and natural gas. In 2021, 75% of the country’s oil and gas needs were met through imports. Thailand has shown a downward trend in its natural gas production since 2019 and according to a 2021 Fitch Solutions report, the trend is going to continue through the decade.
18. Oman
Production in 2021: 1,384 billion cubic feet
Oman is a major producer of oil and gas. In 2015, natural gas accounted for 35% of the country’s oil-gas mix.
17. Argentina
Production in 2021: 1,428 billion cubic feet
According to the IEA, Argentina’s primary energy mix consists of 55% gas and 33% oil. The country has the second-largest shale gas reserves in its Patagonian south after the USA. Nevertheless, according to a Reuters report, the lack of fracking equipment can pose major problems for the country which desperately needs to add new pipelines.
16. Nigeria
Production in 2021: 1,568 billion cubic feet
Nigeria has around 200 trillion cubic feet of gas reserves. However, annually, gas production is significantly less, at 1,568 billion cubic feet in 2022. According to PWC, the country’s gas reserves hold the potential to add $18.3 billion to its gross economic value with around $4.2 billion covered by dry natural gas. However, due to security and financial challenges, Nigeria hasn’t reached its full potential yet.
15. Uzbekistan
Production in 2021: 1,755 billion cubic feet
Uzbekistan is a country rich in fossil fuels such as oil, gas, coal, and uranium. The country has been a big exporter of natural gas. However, in November 2022, its energy ministry announced that the country has reduced exports due to high demand for domestic use. In November 2022, the country’s daily exports decreased from over 353 million cubic feet per day to slightly over 35.3 million cubic feet per day.
14. Indonesia
Production in 2021: 2,082 billion cubic feet
Over 60% of Indonesia’s natural gas production comes from its offshore fields. The four largest natural gas production fields in the country are in East Kalimantan, South Sumatra, North Sumatra, and the South Natuna Sea. Indonesia was the world’s 6th largest natural gas producer in 2000. However, over the years, the country has fallen several spots in terms of ranking.
13. United Arab Emirates
Production in 2021: 2,252 billion cubic feet
According to the US International Trade Administration, 30% of UAE’s GDP and 13% of its exports are hydrocarbon-based. According to Mordor Intelligence, the country expects to increase its oil and gas production capacity with a CAGR of 2% between 2022 and 2027.
Owing to the high demand for natural gas for domestic use, UAE is working on creating several artificial islands to produce natural gas. Together, these islands are expected to increase the country’s natural gas production capabilities by 3 billion cubic feet per day.
12. Egypt
Production in 2021: 2,452 billion cubic feet
Egypt is the largest natural gas producer in the Eastern Mediterranean region. According to the EIA, the country’s natural gas production picked up pace in 2017 with the opening of its Zohr field. In addition, in 2021, 87% of the natural gas produced by Egypt was used domestically.
11. Malaysia
Production in 2021: 2,507 billion cubic feet
Malaysia is quite dependent on its fossil fuel exports. Before the pandemic in 2019, the industry accounted for over $34.5 billion in revenue, representing 14.5% of the country’s goods exported.
In 2021, the country’s natural gas exports were worth $9.51 billion with Japan taking the largest share of those exports, followed by China and South Korea.
10. Turkmenistan
Production in 2021: 3,073 billion cubic feet
Turkmenistan has the world’s fourth-largest gas reserves but due to a lack of infrastructure and investments, the country hasn’t been producing natural gas to its full capacity. Moreover, Russia and Iran have been opposing the Trans-Caspian pipeline, which was supposed to connect to Europe. Nevertheless, Turkmenistan is the largest exporter to China. There are already three pipelines connected between the countries and Turkmenistan currently plans to build a fourth one to increase its exports to the country.
9. Norway
Production in 2021: 4,066 billion cubic feet
Norway has also recently received its 2022 natural gas production data, according to which, the country produced nearly 4372 billion cubic feet of natural gas. Moreover, due to the reduction in Russian gas imports in Europe in 2022, Norway’s natural gas exports were also significantly higher in 2022. The country exported over 4237 billion cubic feet in the year.
8. Saudi Arabia
Production in 2021: 4082 billion cubic feet
According to our data taken from EIA, Saudi Arabia produced 4082 billion cubic feet of dry natural gas in 2021. Saudi Arabia’s new Jafurah project has the potential to be the crown jewel of the country’s natural gas production. The unconventional Jafurah gas field covers an area close to 6600 square miles and has estimated reserves of 200 trillion cubic feet.
Saudi Aramco has begun its talks with equity investors to back a $110 billion investment in the field.
7. Australia
Production in 2021: 5,196 billion cubic feet
Natural gas was first discovered in Australia in 1890. Nearly 25% of the country’s energy needs are met by natural gas. In 2022, Australia’s liquified natural gas exports generated a revenue of $63.2 billion, representing an 86% year-over-year increase due to increased prices. The country exported around 81.4 million metric tonnes of LNG, up 0.5% from the previous year.
6. Qatar
Production in 2021: 5,968 billion cubic feet
Qatar is one of the biggest exporters of natural gas. In 2019, Qatar announced its plan to increase its natural gas production by 67% by 2027 to 126 million tons per annum (1 metric ton LNG = 48,700 cubic feet of natural gas).
In 2021, Qatar started building 4 new production and export terminals and plans to build a couple more before 2030.
Disclosure: None. Top 20 Natural Gas-Producing Countries in the World is originally published on Insider Monkey.
