The global LNG market is likely witnessing a transition in long-term contract tenures, shortening from the historical 20-plus years to mostly three to five years, amid evolving supply-demand fundamentals.
A Middle East-based source told Platts, part of S&P Global Commodity Insights, that a regional producer, who traditionally maintained 20- to 25-year long-term LNG contracts, began offering 10- to 15-year contracts as part of its long-term supply. The supplier has since further shortened the duration, with some contracts now lasting four to five years, including those signed over 2023-2024.
Market participants said the rise in portfolio companies and trading houses has driven the change in offerings for buyers.
«Shorter [tenures], for sure — three to five years,» another Middle East-based source said. «It is mostly driven by portfolio players, while producers still consider longer durations as the base case.»
To capture demand, portfolio companies have offered a range of flexibilities requested by buyers, including terms that large legacy LNG producers have sometimes been reluctant to accept.
Sellers have been willing to offer flexibilities such as FOB loadings, shorter tenures, hybrid and gas hub price indexations, destination diversion rights and, crucially, more competitive prices than producers, sometimes in exchange for operational and volume flexibilities.
In January, Oman LNG said it was beginning a «new chapter» as its contracts, which had been running for more than 20 years, expired. The company signed several sale and purchase agreements of less than 10 years, including deals with Thailand’s PTT, Germany’s SEFE and Japan’s Kansai Electric.
«There are more originators in the market, and they are oil companies. They can stay long on oil as a natural position,» a third Middle East-based source said.
«Portfolio companies are locking in tenures longer than 10 years and then selling on,» a market source said.
Global supply dynamics
Global LNG supply is expected to remain tight through the rest of 2025 and into 2026 due to numerous project delays, with the situation easing over 2027-2028 onward, according to some sources.
A January report by Commodity Insights projected an incremental supply growth of around 30 million-40 million mt annually over 2026-2029.
LNG exports from the US are forecast to increase by 89% from 2024 levels by 2029, driven by the start of the next wave of projects on the US Gulf Coast, the report said.
In 2025, global LNG supply is forecast to grow by 6% year over year as new liquefaction projects come online, but most of this will be required to meet incremental European demand, tightening the market, James Taverner, senior director at Commodity Insights, said March 5.
From 2026 onward, new LNG supply already under construction is expected to outpace demand growth, loosening the market, Taverner said, adding that enough new liquefaction facilities are currently under construction to increase supply capacity by 35%.
«We forecast JKM prices to drop to $9.60/MMBtu in 2027 and further to $8.30/MMBtu in 2028,» he said.
Currently, spot prices remain supported. Platts assessed JKM — the benchmark price reflecting LNG delivered to Northeast Asia — for April at $12.974/MMBtu on March 6, down 1.7% day over day.
The anticipated shift in supply dynamics has led buyers, especially in price-sensitive markets, to seek shorter-tenure contracts to address immediate needs while negotiating separate agreements for the period when LNG prices are expected to drop.
Indian buyers are seeking three- to five-year deals to secure supply during expected tight market conditions, structuring contracts that allow sellers to gain a margin in the later years rather than in the prompt period.
Pricing indexations
In term contracts, especially those with tenures of less than five years, market participants use a formula linked to the LNG forward curve.
The Platts-assessed JKM forward curve at the Singapore close on March 6 showed the 2026 calendar year average at $11.25/MMBtu, compared with $8.95/MMBtu for 2028.
Even when buyers seek offers linked to crude or Henry Hub prices, traders compare their forward curves with those of LNG, determining a slope and constant that reflect market fundamentals at the time of the deal.
Market participants are increasingly choosing to link their long-term contracts, with tenures under five years, to JKM. Gulf Energy‘s and the Electricity Generating Authority of Thailand‘s three-year contracts were also linked to JKM.
Sources said some companies convert crude or Henry Hub-linked exposure to JKM-linked exposure (or vice versa) through simultaneous positions in crude oil and JKM futures, effectively timing their cross-commodity hedge.