LNG has transformed the global energy market by making natural gas truly international. Before LNG, gas was a regional commodity — pipelines could only reach neighbours. LNG ships now link the world's gas fields to energy-hungry markets in Asia, Europe, and South America.
LNG Supply Chain
- Upstream production — Natural gas extracted from gas fields, associated gas from oil fields, or shale wells
- Liquefaction plant — Gas is cleaned (remove CO₂, water, H₂S) and cooled to −162°C in large refrigeration trains
- LNG tanker — Cryogenic double-hull tankers (Q-Flex, Q-Max, FSRU) carry 130,000–266,000 m³ of LNG
- Regasification terminal — LNG is warmed back to gas and injected into the national grid
- End user — Power stations, industrial consumers, city gas distribution, and LNG-fuelled ships
LNG Price Benchmarks
| Benchmark | Exchange | Region | Unit |
|---|---|---|---|
| Henry Hub (HH) | NYMEX / CME | US | $/MMBtu |
| TTF | ICE / EEX | Europe | €/MWh |
| JKM (Japan-Korea Marker) | Platts assessment | Asia-Pacific | $/MMBtu |
| NBP (National Balancing Point) | ICE | UK | p/therm |
LNG's Role in Energy Transition
LNG is positioned as a "bridge fuel" — lower-carbon than coal (roughly 50% less CO₂ per kWh), deployable at scale, and able to back up intermittent renewables. Key demand growth drivers:
- Asian electrification — China, India, Bangladesh, Vietnam displacing coal in power generation
- European energy security — Replacing Russian pipeline gas with Atlantic Basin LNG (US, Qatar, Norway)
- Industrial decarbonisation — Replacing coal in cement, steel, and ceramics
- LNG bunkering — Growing fleet of LNG-fuelled container ships, cruise ships, and tankers
Frequently Asked Questions
- What is LNG?
LNG (Liquefied Natural Gas) is natural gas (predominantly methane) that has been purified and cooled to approximately −162°C (−260°F), at which point it liquefies and its volume shrinks by approximately 600 times compared to gaseous state. This makes it economically feasible to transport by ship to markets too distant for pipeline delivery.
- How is LNG price set?
LNG price benchmarks vary by region: Henry Hub (US gas benchmark, NYMEX, $/MMBtu) for US LNG exports; TTF (Title Transfer Facility, Dutch gas hub, €/MWh) for European LNG; Japan-Korea Marker (JKM, Platts assessment) for Asia-Pacific spot LNG. Many long-term LNG contracts are indexed to oil prices (e.g., 14% × Brent slope).
- Where does LNG come from?
The world's largest LNG exporters are: Qatar (world's largest single exporter), Australia (Gorgon, Ichthys, Wheatstone, APLNG), the United States (Sabine Pass, Corpus Christi, Freeport — shale-backed), Russia (Sakhalin-2, Yamal LNG), Malaysia, and Nigeria. The US has become a major exporter since 2016, with significant additional capacity under construction.