This purified natural gas is then sent to large liquefaction facilities located near the gas source or export terminals. Here, the gas is cooled to -162°C until it liquefies and becomes LNG, reducing its volume by about 600 times compared to its gaseous state. The liquefaction process allows natural gas to be economically transported over long distances by ship.
Global LNG Trade
LNG trade has seen strong growth over the past decade to meet rising energy demand globally. Major LNG producers like Qatar, Australia and the United States have significantly ramped up their liquefaction capacities. On the import side, Asian countries like Japan, China, South Korea and India have emerged as the largest LNG buyers with growing demand from the power and city gas distribution sectors.
In 2020, global LNG trade reached about 359 million tonnes. According to industry estimates, LNG demand is projected to grow at over 3% annually over the next two decades led by Asia. Countries are also diversifying their supply sources with new long-term contracts being signed between producers, traders and end-users. This will help develop a flexible, liquid and resilient global LNG market.
Trends Shaping the LNG Industry
Several trends are shaping the future outlook of the liquefied natural gas industry. On the supply side, there is continued investment in large-scale liquefaction projects globally to capitalize rising demand. Major oil and gas companies are also entering the LNG business and emerging as integrated gas suppliers.
On the demand side, the push for cleaner energies is driving more countries to replace coal and fuel oil with natural gas for power generation and transport. Policies promoting gas-based economies and city gas networks are supporting consumption growth. Additionally, the development of small and medium-scale LNG markets catering to offshore industries and road transportation is opening up new opportunities.
Another key driver is the increasing flexibility of LNG tanks called LNG carriers which allow diversions to non-contractual buyers based on market opportunities. The proliferation of regasification facilities is also enabling easier market access. These factors coupled with the development of gas hubs for trading are improving the fungibility and liquidity of the global LNG market.
Challenges Ahead
While the outlook remains positive, the LNG industry does face some challenges that could impact its sustainable growth. On the supply side, project delays and cost escalations remain a concern for new liquefaction facilities coming online. Geopolitical risks in key producing regions also affect long-term investment decisions.
On the demand side, the pace of growth will depend on the ability of importers to build out receiving and regasification infrastructure to handle increasing volumes. Market diversification is also important to mitigate risks from any single exporter. Environmental issues relating to methane emissions across the gas value chain need to be addressed through sustainability initiatives and carbon capture technologies.
The affordability of liquefied natural gas compared to alternative fuels is a challenge especially in developing markets and for applications such as bunkering. This is weighing on the growth of small-scale LNG infrastructure and use of natural gas in the transport sector. Overall regulatory and policy support will play a crucial role in overcoming bottlenecks and realising the full potential of LNG globally.
Comments
0 comment