Middle East Set to Become Second-Largest LNG Producer Globally

The Middle East, rapidly emerging as a dominant force in natural gas production, is poised to surpass Asia as the world’s second-largest producer by the end of 2025, Rystad Energy said.

In a whitepaper entitled “Middle East energy sector flexes for the future,” Rystad Energy said that current regional production stands at 69.5 billion cubic feet per day (BCFD), with forecasts indicating a 30% increase by 2030, driven by strategic investments in low-cost, high-return projects across Qatar, Saudi Arabia, the UAE, Iran, and Oman.

By 2030, the region is expected to add over 16.5 BCFD of new supply from projects with breakeven costs under $5 per thousand cubic feet (TCF), representing nearly 40% of the world’s low-cost conventional gas growth.

The expansion is largely LNG-focused, with over 60 million tonnes per annum (MTPA) of new liquefaction capacity coming online by 2028. Qatar leads this push, with its North Field expansions nearly doubling capacity to 142 million MTPA.

The UAE follows with the 10 MTPA Ruwais LNG project, and Oman adds one MTPA via Marsa LNG.

In production terms, Iran currently leads the region with 25 BCFD, followed by Qatar at 16 BCFD and Saudi Arabia with 8 BCFD. However, Qatar is set to overtake Iran in the early 2030s as its output grows to 24 BCFD.

Saudi Arabia’s growth is anchored by its unconventional Jafurah gas development and offshore field expansions, with production set to increase 40% by 2030.

Meanwhile, Israel is expanding its role as an East Mediterranean exporter, with output expected to rise by 50% on the back of the Leviathan and Tamar field developments.

On the export front, the region is forecast to unlock 10 BCFD in surplus supply by 2030 to supply European countries diversifying from Russian gas as well as rapidly growing Asian markets. Long-term sales and purchase agreements (SPA), especially in Qatar and the UAE, highlight robust demand.

Qatar has secured major deals with China, India, and Germany, while the UAE’s Ruwais LNG has inked offtake agreements with Shell, Mitsui, EnBW, and China’s ENN.

With cost advantages, massive resource bases, and proximity to demand hubs, the Middle East is set to play a central role in the global gas and LNG landscape for decades to come.

Renewable Energy

On the other hand, The Middle East power sector is undergoing a transition as the region’s intermittent renewable power generation capacity rises to 5% by year-end, up from 3% last year, Rystad said.

With the rapid expansion of renewables, particularly in Saudi Arabia, the UAE and Oman, Rystad Energy expects intermittent renewable power to contribute around 20% to the region’s total power generation by 2030 and 3% by 2035.

Fossil fuels account for 90% of Middle East power generation, with natural gas remaining the dominant source of power, contributing over 1,100 terawatt-hours (TWh) or 72% of generation at present.

The region’s overall demand for electricity is expected to continue increasing at a compound annual growth rate (CAGR) of 3% for the next 10 years due to several key drivers, including population growth, rising temperatures, data centers, huge commercial and public projects, and industrial development.

The flexibility of gas is crucial, particularly during periods of high electricity demand or when renewable generation is insufficient.

As the region moves toward more sustainable energy supplies, the demand for gas in power generation is likely to rise to nearly 1,270 TWh by 2030 and by around 1,180 TWh by 2035, due mainly to the gradual replacement of oil-fired generation and continued reliance on gas for affordable baseload power.

Nuclear power is emerging as a key pillar in Middle East energy, offering a sustainable alternative to conventional fossil fuels. Currently, nuclear power generation in the region is concentrated in the UAE and Iran, comprising around 3% of the overall energy mix, Rystad said.