Updates

LNG puts Europe in the middle of the global gas market

22 July 2016


Turning gas into a liquid to transport it more easily is not only changing the way we perceive gas transport, but also the very way we use gas.


 

Historically, big pipelines have been moving gas from far-away production areas to consumption markets within Europe. These pipelines have a huge capacity, but they are not flexible: you cannot change their route – a situation that often leads to a long-term relation between the producer of the gas and the consumer.

Now, Liquefied Natural Gas (LNG) is dramatically changing that picture, as it is turning gas into a commodity that can be moved virtually everywhere around the world.

At –162°C, gas becomes liquid and it takes 600 times less space than in its gaseous status. Then, LNG carriers – special ships with huge tankers able to handle low temperatures – can carry it anywhere in the world, making it possible to pick the most rewarding markets. And if demand in one market goes down, LNG cargoes can be easily rerouted to more lucrative ones.

Europe is in a good position to make the most out of this new opportunity, which is in fact an effective way to ensure diversity of gas supply and improve security of supply. There are 21 LNG regasification terminals in the Mediterranean Sea, the Atlantic Ocean and, now also, the Baltic Sea. Those 21 terminals can regassify nearly 200 billion cubic meters of gas per year – that’s roughly half of the EU gas demand. LNG comes from a variety of countries: Qatar, Algeria, Nigeria, Norway and now also from the United States. Cross-border interconnections are making LNG available directly or indirectly to nearly all European countries. LNG is an effective tool to handle sudden supply and demand variations – for example to supply more gas in case of a sudden spike in demand: with sufficient LNG on the market, the amount of gas available to consumers can increase very fast.

LNG is a global business, with its own market dynamics; LNG prices are now close to pipeline gas, making it attractive, and opening space for new business opportunities.

LNG is a cleaner solution for transport and it can help improve air quality, be it in trucks or ships. That’s why the strict sulphur emission limits in the North Sea and Baltic Sea have triggered interest in LNG-powered ships. Since the first ferry, Norway’s Gultra, sailed in 2000, more than 75 ships running on LNG have been built. Experts believe that this number will reach 1000 by 2020. The use of LNG in heavy duty vehicles is also increasing. Currently there are over 2,000 LNG-fueled trucks on the road across Europe, with around 80 refuelling points to service them.

The deployment of LNG in shipping and in heavy trucks has prompted the development of “small-scale” LNG infrastructure, opening even further business opportunities: tanks and ships for refuelling, LNG truck loading, LNG filling stations, together with the associated logistics.

 

Thierry Deschuyteneer is Vice-Chair of GasNaturally and Secretary General of Gas Infrastructure Europe (GIE)

Photo credit: GIE