Sustainability in Energy: Liquefied Natural Gas Innovations


Natural gas provides nearly a quarter of the world’s energy needs and its global demand is expected to increase by 50% over the next two decades according to various projections. As populations and economies grow, so too does the need for reliable sources of energy. While natural gas exists abundantly worldwide, its transportation and export has traditionally faced geographic limitations due to its gaseous state at standard temperatures and pressures. However, the emergence of liquefied natural gas or LNG is changing the global gas trade. By cooling natural gas to liquid form at -162°C, LNG allows for its economical storage and transportation over long distances via tankers. This article discusses the rapid rise of LNG as a share of global gas trade and how it is reshaping energy geopolitics and markets.

The Growth of Liquefaction Capacity

Over the past 15 years, global LNG liquefaction capacity has more than doubled from around 200 million tonnes per annum (mtpa) in 2005 to over 440 mtpa currently. Major investments have been made in developing new liquefaction plants mainly in Australia, the United States, Russia and additional production coming online from African nations. Australia remains the world’s largest LNG exporter with over 80 mtpa of current liquefaction capacity concentrated along its northwest coast. The USA has emerged as a new heavyweight in the LNG space going from virtually no exports in 2010 to over 50 mtpa of capacity today mainly sourced from shale gas reserves. Additionally, large-scale projects under development could push global LNG supply past 600 mtpa over the next 5 years if planned timelines are met, potentially outpacing demand growth over this period.

Evolution of LNG Trade Dynamics

Traditionally, LNG trade was dominated by long-term contracts between producers and consumers that incorporated oil-linked pricing formulas. However, the shale gas boom has increased short-term spot cargo flexibility in the market. Newer LNG facilities are also being sanctioned without long-term offtake agreements, instead marketing volumes on an opportunistic basis. As demand continues shifting towards Asia Pacific – particularly China, there has been a geographic rearrangement of LNG flows. Whereas traditional importers like Japan once received the bulk of exports, now over 50% of global LNG is shipped to emerging Asian markets. Established producer-consumer ties are loosening, allowing for a more liquid and flexible global gas market. The emergence of major new interconnected LNG hubs in the United States are also fostering derivative-based gas pricing.

Geopolitical Implications

The increased tradability of liquefied natural gas has changed global gas dynamics in ways that impact traditional energy relationships. For one, it has weakened Russia’s dominance as a supplier to Europe. Before the shale revolution, Russia supplied over 30% of the European Union’s gas needs primarily through pipeline networks. But now Europe is diversifying import sources and infrastructure to include more LNG deliveries from new frontiers like the US. Countries too are pursuing re-export options after receiving LNG cargoes to lessen reliance on any singular external entity. Energy security concerns that once kept markets rigid are giving way to market-based considerations of affordability and reliability of supply. Though domestic pipeline infrastructure remains important, LNG facilitates energy exchange between previously unconnected basins and consumer pools in a politically expedient manner.

Challenges and Path Forward

Despite the rapid progress, some challenges remain for LNG’s continued ascendancy. With liquefaction and regasification capacity outpacing current consumption patterns, producers are facing oversupply pressures which could depress prices from historical levels. Additionally, many proposed LNG schemes require long lead times, huge capital commitments and may not materialize if market conditions change. Environmentalists also contend that LNG production and use, while relatively cleaner than other fossil fuels, still emits significant CO2 and methane emissions. Yet with rising global energy needs and the abundance of natural gas resources, LNG is well-positioned to spread its footprint. By offering a versatile and secure source of power, ongoing technology improvements can potentially raise its competitiveness further against other alternatives.


In summary, the emergence of liquefied natural gas trade has broken down some geographic barriers and introduced more diversity, flexibility and interconnectedness into global energy supply networks over the past decade. Its impact expands beyond economics to also shape geopolitics and international relationships in fundamental ways. While some industry challenges persist, LNG’s disruption of established patterns makes it an indelible part of ensuring secure, affordable and environmentally balanced energy supplies for both developed and developing economies worldwide in the decades ahead.


1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it”