Soaring demand for natural gas has driven dealmaking in the sector to its highest level in over a decade, with more than $32 billion spent on gas production projects globally in the first half of this year, according to industry consultancy Wood Mackenzie. This surge reflects intense competition among buyers, who are vying for a limited number of assets amid shifting market dynamics and geopolitical uncertainties.
The current wave of transactions has been propelled in part by the ongoing conflict in the Middle East, which has heightened the strategic importance of natural gas and influenced valuations beyond the region. Investors and energy majors are increasingly pursuing upstream gas projects in North and South America, while national oil companies from the Gulf states seek to diversify portfolios by acquiring assets abroad.
Gas-focused deals this year have been completed at an average premium of 21 percent above Wood Mackenzie's valuations, marking the highest premiums since 2013. The largest transaction thus far was Shell’s $16.4 billion acquisition of Canadian shale producer ARC Resources, its biggest purchase since acquiring BG Group about a decade ago.
The broader appeal of gas assets is supported by expectations of sustained demand growth. The International Energy Agency (IEA) projects that natural gas consumption will continue to outpace oil if current energy policies persist. Even under more stringent climate policy scenarios, the IEA anticipates gas demand will plateau around 2035 but remain elevated relative to current levels for many years thereafter.
Geopolitical factors, including tensions between the United States and Iran, have further bolstered investment interest. Greg Aitken, director of corporate and M&A research at Wood Mackenzie, noted that the entry of additional buyers has intensified competition, leading to more aggressive pricing in gas asset transactions.
Major Gulf producers had already begun expanding their gas holdings outside their home markets prior to recent conflicts. Abu Dhabi’s investment arm XRG holds assets in Texas, Mozambique, and Turkmenistan and has recently added projects in Azerbaijan, Argentina, and Venezuela. Saudi Aramco is also focusing on international gas growth, with investments such as the Port Arthur LNG project in Texas and stakes in multiple liquefied natural gas ventures through MidOcean Energy, a company backed by EIG.
Japan’s industrial players are significant investors in U.S. shale gas, motivated by growing domestic LNG demand. Japanese firms collectively control about 36 percent of production in the Haynesville shale basin, spanning east Texas to northwest Louisiana.
Overall, the U.S. gas sector is experiencing robust investment activity, with approximately $30 billion spent on developing unconventional gas resources in North America during the first half of the year—three times the average spending over the previous three years, according to Wood Mackenzie. This trend underscores the growing strategic importance of natural gas as a transition fuel amid global energy and environmental shifts.