Natural gas has come a long way from being flared up as a byproduct to a serious alternative to oil and coal. Continued market growth in all major regions worldwide has driven the demand for natural gas production, which reached almost three trillion cubic meters (tcm) in 2006. With new discoveries in Kazakhstan, Turkmenistan and China, the natural gas reserves have shown upward trend reaching 6.2 tcf. The future market share of natural gas is all set to grow from the current share of 21% driven by the strong demand in Europe and emerging economies in Asia like India and China. In the absence of pipeline infrastructure, most of this demand has to be fulfilled by liquefying gas and supplying it as liquefied natural gas or LNG.

The low density of natural gas makes it more costly to contain and transport than other fuels. Before the development of LNG technology, the transportation of natural gas was limited to movements that could be served by pipelines. Gas was unable to utilize that mainstay of international oil trade – marine transportation. The development of LNG has changed all that, and with the improvements in technology and costs, gas is rapidly becoming an internationally traded commodity. In last two decades, LNG demand has experienced 7.7% annual growth spurred by strong imports by European markets. During 2006, around 22 million tons of new liquefaction capacity was added due to significant production gains made by Qatar, Australia, Trinidad and Egypt. Further, new regasification capacity is expected to be commissioned in the UK, Spain and France during 2007 along with shipping capacity which is running ahead of liquefaction capacity.

The international trade in LNG centers on two geographic regions - the Atlantic Basin, involving trade in Europe, northern and western Africa, and the US Eastern and Gulf coasts; and the Pacific Basin, involving trade in South Asia, India, Russia, and Alaska. Today, Japan, South Korea and Taiwan are the leading LNG importers representing more than two-third of world LNG imports. Indonesia, Malaysia and Algeria have been the leading LNG exporters for last decade or so with Qatar emerging as a major player in recent years.

By 2010, LNG is expected to make up to 20% of the gas supplies of the OECD countries. The production of LNG is estimated to double from current levels with majority of gas sector investment focusing on developing LNG supplies. There is a need to look at the safety and security aspects of the LNG infrastructure and towards increasing the current capacity of the LNG tankers and terminals.



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Pages: 134
Publication Date: October 2007
Publisher: Energy Business Reports