Industrial gases are the plumbing of the modern economy, and Linde runs a great deal of the pipes. The company stands atop a concentrated industry that prizes reliability, safety and engineering finesse over splashy branding. Its competitive position rests on decades of built assets and customer entanglement that are difficult to replicate, reinforced by long-term take-or-pay contracts that make cash flows unusually steady for a chemicals business. In a cyclical world, Linde looks almost utility-like—until you peer into the growth projects tied to semiconductors, clean fuels and process decarbonization.

Linde sells certainty. Steel mills, refineries, chip fabs and hospitals cannot function without oxygen, nitrogen, hydrogen and specialty gases, delivered at exact purity and pressure, every hour of every day. Linde does this through three supply modes. At the high end, it builds, owns and operates on-site plants behind the customer’s fence, piping molecules straight into the process. In dense industrial zones it connects multiple customers to shared pipeline networks. And for smaller or variable users it ships liquid or packaged gas by truck and cylinder. The on-site and pipeline models are the franchise: they put Linde’s steel and sensors on the ground, tie output to a customer’s process controls, and make switching suppliers tantamount to re-engineering a factory. Linde openly describes these pipeline and on-site networks as core delivery modes, the backbone of its offering.

An Oligopoly With Barriers You Can Touch

This is an oligopoly with three global leaders—Linde, Air Liquide and Air Products—plus a handful of regional players. The economics stem from physics and geography: gases are expensive to move relative to their value, so supply must be local and redundant, rewarding companies with existing footprints and safety records. The result is an industry that has stayed profitable across cycles, with end-market diversity smoothing bumps in any single sector.

Linde’s edge is scale plus engineering. The company not only operates thousands of production units and distribution assets; it also designs and builds the equipment itself through Linde Engineering, from air-separation units to hydrogen and synthesis-gas plants. That vertical capability lets Linde tailor the plant to the contract and capture value across design, build and decades of operation. It is harder for a new entrant to win a contract if it cannot guarantee performance and safety at commissioning—and then keep uptime near perfect for twenty years.

The Take-or-Pay Engine

The business model’s stability comes from the contract mechanics. On-site “sale-of-gas” agreements are typically total-requirements contracts running a decade or two. They include a fixed monthly facility charge that covers the capital Linde has sunk into the plant and a variable component for the gas itself. Crucially, the contracts include escalation and pass-through clauses for electricity and feedstocks—the biggest costs in making and moving gases—so energy price spikes are largely billed through rather than absorbed in margin. Even when cost pass-through lowers the reported top line, the profit impact is minimal by design. In its revenue-recognition note, Linde describes on-site product-supply agreements as “total requirement contracts” that “typically” run 10–20 years and “contain minimum purchase requirements and price escalation provisions.” The same filing discloses about $45 billion of consideration tied to minimum-purchase requirements, underscoring the scale and persistence of these commitments.

The duration point is not marketing gloss. Linde and its subsidiaries describe tonnage (on-site) contracts as running 10 to 20 years, with minimum-purchase commitments and inflation-linked terms—language that explains why cash flows look steadier here than in most chemicals. In the rare case a customer curtails production, the minimums and facility charges still apply, preserving baseline returns on invested capital.

Growth Without Ditching Discipline

Steadiness doesn’t preclude growth. Linde has been leaning into projects where its process know-how meets customers’ decarbonization mandates—lower-carbon hydrogen, CO₂ capture and purification, and specialty gases for chip manufacturing. The company has also highlighted a sizable, contracted project backlog in its on-site “sale-of-gas” pipeline, alongside healthy annual base capex that densifies its networks. As of August 1, 2025, management guided full-year capital expenditures of roughly $5.0–$5.5 billion and cited about $7.1 billion of contractual sale-of-gas backlog inside a broader project slate—helpful visibility in a patchy macro.

The Moat, In Plain Terms

Four elements define the moat. First, asset proximity and sunk cost: once Linde builds a plant on a customer’s site and ties into their controls and safety systems, replacing it is risky and costly. Second, network density: pipelines and backup supply across multiple plants in a region let Linde promise reliability that a standalone competitor cannot match. Third, process credibility: decades of operating data, permitting experience and safety performance lower customers’ operational and reputational risk. Fourth, contracting and capital cycle discipline: projects are typically sanctioned only with long-term take-or-pay economics that cover the capital and yield attractive returns, while pass-throughs protect margin from energy swings. Together, these make price the wrong hill for a customer to die on.

Risks That Actually Matter

Investors should focus on a few practical risks rather than generic macro worries. Energy and feedstock costs are passed through, but not always perfectly and not always immediately; in extreme dislocations, the math can lag or counterparties can push back. Project and execution risk is inherent to any large on-site investment; a delayed customer facility or commissioning hiccup can defer cash flows. Policy risk looms over parts of the clean-hydrogen arena, where subsidy rules and offtake frameworks have seesawed, stretching timelines for final investment decisions. Competitive pressure exists—particularly in Asia where local and regional players can be aggressive—but the global triopoly’s installed base and safety credentials still matter most when contracts renew. Finally, while contract minimums cushion volume shocks, they don’t eliminate customer credit risk or sector concentration; steel, chemicals and electronics each bring their own cyclicality and idiosyncratic hazards.

How It Adds Up

Linde’s appeal is less about chasing commodity price upswings and more about underwriting dependable, inflation-protected returns on steel and software embedded at the heart of other people’s plants. It is not immune to cycles or to the politics of the energy transition. But the combination of long-dated take-or-pay contracts, energy pass-throughs, regional networks and deep engineering know-how creates a real moat—one built from pipes, compressors and decades of trust. When growth comes from contracted projects that customers need for reliability, yield or emissions, the risk-adjusted profile is better than most realize. That’s why, in an industry many investors barely notice, Linde keeps compounding in plain sight.