With increasing global energy needs and environmental challenges, exploring new energy sources is essential. Natural gas hydrates (NGHs) which are crystalline compounds of methane and water are promising energy sources due to their abundance and potential as a clean energy resource. Traditionally viewed as obstacles due to their pipeline-blocking potential, NGHs are now recognized as a vast potential energy resource, with enormous methane reserves globally. However, literature on NGHs production through CO2 sequestration, particularly, in the form of a consolidated review is sparse. This review explores the fundamental mechanisms, classification, and various production methods of NGH. Unique to this study is a comprehensive analysis of CO2-CH4 exchange mechanisms within NGHs, spanning bulk interactions, porous media dynamics, and specific scenarios in methane hydrate reservoirs. The study reviews advanced simulation techniques, including molecular dynamics (MD) and numerical simulations, to explain the kinetics and microscopic dynamics of methane release processes. This review aims to consolidate current knowledge and breakthroughs in NGH utilization and identify/address the complex multiphase, multicomponent flow dynamics crucial for efficient methane extraction and CO2 sequestration. Findings indicate the potential of NGHs as a dual-purpose resource, facilitating methane recovery while enabling CO2 storage, thus offering a sustainable pathway toward energy production and environmental protection.