Is LNG taking natural gas from golden age to heroic era?
Twelve years ago, the International Energy Agency asked the question: “Are we entering a golden age of gas?”
It posed this rhetorical question during the presentation of a scenario showing global natural gas consumption rising by more than 50 percent and accounting for more than a quarter of global energy by 2035.
In the intervening 12 years, natural gas demand has grown even faster than the IEA’s expectations and last year already accounted for 23 percent of primary global energy demand. One reason for this extraordinary growth has been the rapid rise of liquefied natural gas trade, which hit a record high in 2022.
Today, one could ask the question: “Is LNG taking natural gas from a golden age into a heroic era?”
Only last year, the versatility of LNG saved Europe from a much more serious energy crisis after it unexpectedly lost access to pipeline gas from Russia.
Less sudden but no less remarkable has been the role of LNG in Asia, where over the past 20 years, the striking domed LNG tankers have delivered gas to previously energy-poor regions, helping to reduce carbon emissions and lift hundreds of millions of people out of energy poverty.
Saudi Aramco made its first international investment into LNG in September by taking a strategic minority stake in MidOcean Energy for $500 million, which is in the process of acquiring interests in four Australian LNG projects.
LNG, which is supercooled gas shipped on special tankers, today accounts for about 15 percent of all gas supply worldwide. One of the advantages of LNG over pipeline gas is that it can be transported over large distances, routed to new demand centers at short notice, and traded on the open market. This makes LNG, particularly in demand at times of market disruption.
So LNG opens up previously stranded gas resources and extends the benefits of natural gas to markets that have no ready access to pipelines.
Over the past 30 years, natural gas has been a major driver of climate progress in Europe and North America by reducing emissions from the power sector, which previously relied on coal. And over the next 30 years, natural gas is expected to play a critical role in the energy transition in Asia and Africa.
After the MidOcean investment, Aramco CEO and President Amin Nasser said he “anticipated strong demand-led growth for LNG as the world continues on its energy transition journey, with gas being a vital fuel and feedstock in various industries.”
Across Asia today, LNG is a vital part of the energy mix, and Asian buyers are expected to compete with Europe for new supplies over the coming five years as the LNG market is forecast to grow by another 25 percent to 500 million tons annually.
In fact, China overtook Japan to become the world’s largest LNG importer and the US became the top LNG exporter in 2023, according to a new IEF report published in collaboration with Synmax, a data analytics company.
The US is today the undisputed leader in LNG exports, having seen exports rise by 135 percent since 2019. The US now delivers to 36 countries and will remain the largest source of LNG supply growth in the future, with export capacity expected to grow by 17 percent by 2025 and another 43 percent by 2028.
In Europe, LNG is now an integral part of the energy mix, acting as a baseload energy source for the power sector. LNG’s share of gas demand rose from 12 percent a decade ago to more than 50 percent and Europe’s regasification capacity is likely to grow by another 48 percent by 2030.
Over the medium term, Southeast Asia is expected to become the new LNG import hotspot, with demand poised to double by the end of the decade, driven by demand for clean cooking fuel and electricity generation, the report says. We must not forget that in developing countries, gas often replaces charcoal and animal waste for cooking in rural areas, delivering health benefits to rural and marginal populations, especially women.
The energy crises of the past few years have underscored the importance for governments to invest in diverse energy sources and technologies, including gas and LNG infrastructure.
As we welcome the rise of LNG, we must also accelerate measures to reduce methane emissions from the gas sector. At the IEF, we recently developed a new methodology for cutting methane emissions from the gas supply chain using cutting-edge satellite data.
Cutting methane emissions will reduce the impact of gas production on global warming and support the case for investment in new liquefaction projects, which are needed to continue extending the benefits of natural gas to new markets and reducing pollution and carbon emissions.
- Joseph McMonigle is secretary-general of the International Energy Forum.