Natural gas is an essential energy fuel for the global economy. Which countries are leaders in natural gas production?
Natural gas is an important energy fuel, even as the world transitions to a carbon-free economy. When investing in this market, it's key to know the ins and outs of natural gas production by country.
Global natural gas production increased by nearly 5 percent to reach a record 4.04 trillion cubic meters in 2021, according to data from Statista. Russia currently ranks as the world’s second largest natural gas producer and is the leading exporter of the fuel.
Last year, Russia’s natural gas exports came in at 202 billion cubic meters of gas via pipelines, and 39.6 billion cubic meters of liquified natural gas (LNG). But the war in Ukraine may change that — Russia has significantly cut natural gas exports to Europe, which previously relied on the country for 40 percent of its supply, resulting in skyrocketing energy prices in the region and abroad. The European Union has laid out a plan to phase out Russia-sourced natural gas by 2027.
These market forces have many investors curious about which countries produce the most natural gas, and which have the potential to take Russia’s place. Read on for a look at the top 10 natural gas-producing countries in 2021 based on Statista data.
1. United States
Production: 934 billion cubic meters
The US is by far the largest producer of natural gas in the world, and represents nearly a quarter of total global natural gas production. The country’s output has increased by more than 300 billion cubic meters in the past decade owing to the increasing cost of coal and advancements in extraction technology such as horizontal drilling and hydraulic fracturing.
In addition to being a major natural gas producer, the US is also by far the biggest consumer of the fuel. Last year, US demand for natural gas totaled 836.7 billion cubic meters, primarily for home heating and generating electricity.
In the first half of 2022, Reuters reported that the US became the world’s largest exporter of LNG as the country increased shipments to Europe due to Russia’s war in Ukraine.
Production: 701.7 billion cubic meters
As the largest exporter and the next largest producer of natural gas in the world, Russia also holds the biggest-known natural gas reserves on the planet. The country’s state-owned energy group Gazprom reportedly holds a 16.3 percent share of global natural gas reserves. Novatek is another of the country’s main gas producers.
“Historically, production was concentrated in West Siberia, but investment has shifted in the past decade to Yamal and Eastern Siberia and the Far East, as well as the offshore Arctic,” as per the International Energy Agency.
Production: 256.7 billion cubic meters
Iran is the third largest natural gas-producing country, representing 6.4 percent of global output. The Middle Eastern nation ranks second in terms of natural gas reserves. However, its natural gas industry infrastructure is far behind the top two natural gas producers. In 2021, Iran’s natural gas output was only about a third of that of Russia and a quarter of that of the US.
“Given rising global demand for gas, and Europe’s need to replace imports from Russia, Iran likely hopes to grab a share of the international gas market going forward, although this would require huge investments and capital that it currently lacks” stated Banafsheh Keynoush, a fellow at the International Institute for Iranian Studies and a scholar with the Middle East Institute.
Production: 209.2 billion cubic meters
In recent years, China’s government has incentivized the transition from coal to natural gas for energy production to reduce air pollution and meet emissions targets. Its natural gas output has nearly doubled in the past decade, but China still relies on imports to meet about half of its demand. Australia, Turkmenistan, the US, Russia and Qatar are some of its biggest providers.
“In March 2022, China’s government released its 14th Five-Year Plan (2021-25), which sets the domestic natural gas production target at 22.3 (billion cubic feet per day) by 2025, or 3.0 (billion cubic feet per day) more than domestic production in 2021,” according to the US Energy Information Administration (EIA).
Production: 177 billion cubic meters
Qatar is the fifth largest natural gas producer and hosts the third largest proved natural gas reserves in the world. The majority of the country’s reserves are located in the world’s largest natural gas field, the offshore North Field, which it shares with Iran.
The Middle Eastern country also ranks as the third largest natural gas exporter. Narrowed down to type of natural gas export, Qatar leads the world in LNG exports. Recently, Qatar has made moves to capitalize further on its resources in an effort to expand its footprint in the international natural gas market. Statista reports that state-owned Qatar Petroleum is looking “to increase its LNG export market to compete with Russian LNG deliveries.”
Production: 172.3 billion cubic meters
Canada holds 83 trillion cubic feet of proved natural gas reserves, and the Western Canadian Sedimentary Basin (WCSB) is the prime source of the majority of Canada’s natural gas production. In addition to the WCSB, offshore fields near Newfoundland and Nova Scotia, the Arctic region and the Pacific coast hold significant natural gas reserves.
Canada is also a top natural gas exporter, relying exclusively on pipelines, with the US as its only trading partner. In 2021, 99 percent of all US natural gas imports came from its neighbor to the north. The fact that Canada lacks LNG infrastructure makes it an unlikely potential source for meeting Europe’s natural gas needs in lieu of Russia.
Production: 147.2 billion cubic meters
Since 2009, Australia has added more than 100 billion cubic meters of natural gas production. Nearly all of Australia’s natural gas resources are located in the massive gas fields on the North West Shelf, “providing feedstock to seven LNG projects.”
Australia’s LNG exports have grown exponentially over the past decade as several new production facilities have come online. Today, Australia has the largest operating LNG export capacity in the world.
8. Saudi Arabia
Production: 117.3 billion cubic meters
The eight largest natural gas-producing country, Saudi Arabia saw its output increase by nearly 4 percent from the previous year to total 117.3 billion cubic meters of the energy fuel. This figure also represents its highest natural gas production level in decades.
The EIA reports that this production growth was due in large part to increased development of standalone natural gas wells. Last year, state-run Saudi Aramco awarded contracts to energy companies looking to develop Saudi Arabia’s largest unconventional gas field, Jafurah, located near the Persian Gulf.
As of now, the country does not export its natural gas production; however, the Saudi government plans to begin natural gas exports by 2030. According to the EIA, Saudi Arabia is working toward replacing “crude oil, fuel oil, and diesel-powered electric generators with natural gas and renewable energy generation by 2030, which will likely increase domestic natural gas demand.”
Production: 114.3 billion cubic meters
Norway is the world’s ninth largest natural gas producer and third largest natural gas exporter. The Scandinavian country has understandably replaced Russia as the major supplier to the European natural gas market.
Norway’s natural gas companies have ramped up production in response to increased demand from its neighbors, and new estimates show that the country could produce a record 122 billion cubic meters of natural gas in 2022.
Production: 100.8 billion cubic meters
Rounding out the top 10 natural gas-producing countries is Algeria. In 2021, the country’s output increased by about 24 percent over the previous year to reach just over 100 billion cubic meters for the first time.
Algeria has the fifth largest LNG export capacity in the world, and in 2021 its exports increased by more than 28 percent over 2020. Last year, the country supplied about 11 percent of Europe’s natural gas demand, which is expected to increase in 2022. In April this year, Italy signed an agreement with Algeria to increase the amount of natural gas it imports from the North African country.
What is natural gas?
Natural gas is a mixture of methane and other naturally occurring gases. As fossil fuels, both crude oil and natural gas are formed via the same geological process. It isn't surprising then that the two materials are often found together.
What is natural gas used for?
Natural gas is used as a fuel for heating, generating electricity and powering vehicles. It is used to manufacture various products, such as vinyl flooring, carpeting, Aspirin and artificial limbs. Natural gas is also a key component in the production of ammonia.
Is natural gas a clean energy?
Although natural gas is a fossil fuel, it is often pegged as a "cleaner" energy option than coal or oil.
According to the EIA, the burning of natural gas for power emits fewer greenhouse gas emissions and pollutants, since it burns more easily and contains fewer impurities than other fossil fuels. The EIA also notes that natural gas produces less carbon dioxide per equivalent amount of heat production.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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