The future looks good for LNG technology

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The Future of LNG

Liquefied natural gas is a natural gas that has been cooled to a liquid for safe transportation and storage. The gas is odourless, colourless and undergoes the liquefaction process to remove components such as dust, water and acid gases that would otherwise hinder safe transportation and cause difficulty in using the gas later on during further processing. The current state of Liquefied natural gas industry has been on an incremental growth due to the increasing demand for the LNG especially in areas where local production is decreasing or does not have local deposits.

Some of the Key factors that will affect the future of the LNG include;

• The demand for energy is set to rise by 18% by the year 2035 with

• The emergence of new sources of energy such as the renewable sources of energy will affect the demand of LNG as competition increases due to the need of using cheap sources of energy such as the renewable sources and alternative fuel.

• The future of LNG looks bright and the demand keeps growing. Through the LNG supply chain, gas suppliers and customers are able to link and this bridges the geographical gap in the global map.

• The demand trend could keep on growing as emerging economies seek to import more energy to add to their own domestic production. Markets such as Taiwan, Japan, and South Korea are likely to have an upside in the even as they continue to choose LNG as compared to nuclear energy. This will translate to increased demand.

• Other markets such as Mexico, India, and Egypt are likely to cut on their demand for LPG due to their on massive development on their local gas production. This will mean that they will only need a moderate supply to supplement their production.

Drivers to LNG Demand

Several factors are responsible for the demand for LNG in the world market. They include;

• Industrial and transportation sectors are driving the demand LNG due to environmental concerns in major economies.
• LNG is also in demand for provision of power due to the need to cater for power outages that occasion most countries in the emerging economies.
• Emerging markets, especially in Asia such as China, India and South East Asia, additional markets in Asia, will mean increased demand for LNG. The demand for LNG in these markets is expected to rise from 23% in 2019 to 42% in 2030.LNG demand in China will continue to rise due to the implementation of environmentally friendly policies and on-going gas reforms.
• Demand for LNG in India will be driven by the industrial sector where LNG is expected to play a key role as the demand for energy increases. The demand for power is driven by the increased need for power and low production of domestic gas.
• The price of LNG in South Asia and the expanding infrastructure will mean increased demand due to high capacity infrastructure that has been developed and that is still being expanded.
• Demand in Europe is affected majorly by prices and geopolitics which play a big factor in determining whether demand is met.
• To fulfil the demand in Asia, Infrastructure will, therefore, need to be developed at an accelerated pace and also lower prices to ensure the Asian countries who are among the leading buyers of LNG are able to increase their import volumes of LNG which will translate to increased sales of the LNG.

Emerging LNG Purchase options

• The industry is gaining a global outlook and more supply options are getting fixed as customer needs to keep changing in the world market. Emerging sales options include long term contracts and spot supply arrangements
• The emergence of alternative fuels has created competition and the need to create flexible contracts to favour the LNG buyers has arisen. Such flexible contracts will make it possible for buyers to have different delivery locations and also the ability to purchase reduced volumes of LNG.
• Additionally, LNG buyers have expressed their wish to move away from oil prices which have traditionally been linked to LNG. This is a precautionary measure to avoid a spike in the future. This wish has however not been implemented due to lack of consensus by the LNG buyers on the best method of proceeding with the proposal.
• Since 2014 LNG contracts have been on the decline and there is need to come up with customized purchase options to retain the current customers and also be able to sell new customers purchase the LNG.
• Over the years the requests for flexible volumes have been on a decline and this has posed challenges for project financing which does not accept to finance projects with uncertainties. This has made the portfolio players remain in project financing due to their expertise on risk-taking and financing.
• Developed nations such as China, Japan, and India have set up trading platforms to enable them to pick the best price point for LNG purchases in accordance with the local demand and supply. The trading platforms are expected to act as reference points as the countries seek to secure favourable long term LNG contracts.
• LNG projects are expected to reach final investment decisions by the year 2025 to be able to price its supplies even as most buyers seek flexible contracts which are unfavourable to LNG projects due to the inability to secure funding. This is likely to translate to supply shortage and which could lead to the rise of the LNG prices.

With the increasing use of LNG as a shipping fuel there needs to be increasing development of bunkering operations around the world.

The port of Rotterdam has reported the throughput of LNG as a bunker fuel has increased from 1,500 tonnes in 2017 to 9,500 tonnes in 2018.

With this increase in throughput the need for reliable transfer systems has never been more important. One of the leading companies in this area is KLAW LNG who offer world leading lng transfer systems with can be used for both ship to ship and shore to ship transfers. This is vital to keep a high safety record in this growing energy sector. They have also just carried out the first fully automated fuel transfer which you can read more about from LNG Industry News


Several factors affect the LNG industry as highlighted above. The future of LNG is based on factors such as demand curves, supply ability, geopolitics and also the alternative energy that is slowly being embraced by several countries. The LNG will require improved infrastructural development to cater for increased volumes and be able to bridge any gap.

The LNG industry should also be able to regulate the prices to ensure that it is able to competitively sell the LNG to its buyers. The current state of the LNG industry and also the future prospects need careful assessment to ensure that LNG industry continues to meet energy demands around the globe to spur economic growth especially in emerging economies that rely on LNG for their industrial needs.