Five Things You Should Know About Liquefied Natural Gas (LNG) – Economic Policy

Europe is turning to liquefied natural gas (LNG) to reduce its dependency on Russia. Overview of this product that has the advantage of being transported by boat from one point in the world to another, but does not work “miracles”.

600 times less space

In order to liquefy it, the natural gas is cooled after it has been extracted using a refrigeration circuit, which converts it to a liquid state at -162 °C.

In this form it takes up much less space (600 times less than in the gaseous state) and can therefore be stored on board LNG tankers to be transported to the other end of the world when needed.

On arrival, it is regasified to be fed into the national gas transmission grid, or it can be trucked to industrial sites.

A flexible solution

Unlike gas, which is transported via pipelines – a large fixed infrastructure – LNG allows for great transport flexibility and supply from any producing country.

The sources are varied: the three largest exporters are Australia, Qatar and the United States. In all, about twenty countries export LNG with very different profiles, from Papua New Guinea to Trinidad and Tobago via… Russia.

According to the Shell LNG Outlook report, LNG trade grew by 6% last year, driven by rising demand in China and South Korea. Global demand should continue to grow, driven in particular by Asia.

More LNG for Europe?

“The EU could theoretically increase its LNG imports by around 60 billion cubic meters in the short term,” estimates the International Energy Agency (IEA) in its plan to reduce dependence on Russian gas. For its part, the European Commission speaks of a potential of 50 billion m3.

Problem: All the world’s importers are fighting for the same supplies, with limited global production and the risk of sharp price increases.

“LNG is a very important flexibility lever”, but “unfortunately we cannot expect miracles in the short term,” says Vincent Demoury, General Delegate of the International Group of Liquefied Natural Gas Importers (GIIGNL).

“It is estimated that at most another 35 billion cubic meters will come onto the market worldwide this year; it is possible that China will capture about half of it, leaving less than 20 billion cubic meters in the European market,” he calculates.

New infrastructure

Some European countries like Poland or Lithuania have built LNG terminals to be less dependent on Russia. But others like Germany have not yet – a situation that the country would like to remedy.

However, building a terminal takes time: 2 to 3 years. Another option: Use floating terminals (FSRUs), which are quicker to get up and running but still take “12 to 18 months,” says Mr. Demoury.

Beyond the terminals, it is then the transport by gas pipeline within the European continent that is blocked at certain points due to the lack of connecting lines. Spain, for example, has several LNG terminals, but capacity is then limited to route the gas beyond the Pyrenees to the rest of the continent.

A controversial environmental record

The LNG sector likes to emphasize its advantages for the climate and air pollution: According to the promoters, gas advantageously replaces coal for power generation or heavy oil for ship propulsion.

But “replacing one fossil fuel and one Russian dependency with another would prove to be a dead end for Europe in the medium term,” criticized the Climate Action Network in response to the European summit in Versailles.

“LNG has a very large climate impact because it is very energy-intensive, because it is pushing production higher and higher due to the opening of world markets, and because its value chain causes methane leaks,” complains Lorette Philippot of Friends of the Earth.

In order to liquefy it, after its extraction, the natural gas is cooled by a refrigeration cycle that transforms it into a liquid state at -162 °C and in this form it occupies much less space (600 times less than in gas) and can therefore it can be stored on board LNG tankers to be transported to the other side of the world when needed. On arrival it is regasified to feed into the national gas transmission grid or it can be transported to industrial sites by road tanker. Contrary to transport of gas through pipelines – a large fixed infrastructure – allows LNG great transportation flexibility and supply from any producing country Sources are diversified: the top three exporters are Australia, Qatar and the United States. In all, about twenty countries with very different profiles export LNG, from Papua New Guinea to Trinidad and Tobago via… Russia LNG trade rose 6% last year, according to Shell, driven by rising demand in China and South Korea LNG Outlook- Report. Global demand is likely to continue to grow, driven in particular by Asia: “The EU could theoretically increase its LNG imports by around 60 billion cubic meters in the short term,” estimates the International Energy Agency (IEA) in its plan to reduce dependence on Russian gas. For its part, the European Commission speaks of a potential of 50 billion m3. Problem: All the world’s importers are fighting for the same freights, with limited world production and the risk of a sharp rise in prices. “LNG is a very big lever of important flexibility,” but “in the short term, unfortunately, we cannot ask it to perform miracles,” says Vincent Demoury, General Delegate of the International Group of Importers of Liquefied Natural Gas (GIIGNL). “It is estimated that this year In most cases, another 35 billion m3 will be placed on the world market; it is possible that China will capture about half of it, leaving less than 20 billion m3 on the European market,” some European countries, such as Poland or Lithuania, have built LNG terminals to be less dependent on Russia. But others like Germany don’t currently have one – a situation the country would like to rectify. However, building a terminal takes time: 2 to 3 years. Another option: use floating terminals (FSRUs), which can be commissioned more quickly but still require “12 to 18 months,” says Mr. Demoury. Beyond the terminals, transport is then via gas pipelines within Europe Continent stuck due to lack of connections in certain locations. Spain, for example, has several LNG terminals, but the capacity is then limited to circulate the gas beyond the Pyrenees to the rest of the continent. The LNG sector readily highlights its climate and air pollution benefits: gas favorably replaces coal to generate electricity or heavy fuel oil to propel ships, according to its proponents. ‘Europe in the medium term’, criticizes the Climate Action Network in response to the European summit in Versailles. upstream, and because its value chain causes methane leaks”, regrets Lorette Philippot, Friends of the Earth.

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