LNG in a Changing World

LNG in a Changing World: Stability, Volatility, & the Path to Net Zero

The demand for liquified natural gas (LNG) is rising. This transportation method for natural gas is complex, as it involves cooling the gas to  -161oC (-259F), shipping it in specially designed vessels and regasifying it in dedicated terminals, before it reaches the customer.

But its use is increasing, because it allows gas to be transported from a wider range of producers to a wider range of buyers than would be possible using existing pipelines.
Natural gas is an attractive option for many uses including heating, cooling, electricity generation and  production of industrial materials (such as steel and concrete). Estimates vary as to its emission savings in comparison with coal, but there is agreement that it also involves lower emissions of particulates and pollutants such as sulphur dioxide or mercury.

What lies behind very different predictions of LNG prices? The factors that underlie volatility are many. They include geopolitical instability, notably but not exclusively Russia’s invasion of Ukraine. They also include decisions taken by national authorities on whether gas is on the pathway to Net Zero, as a transition fuel or as a lower-carbon alternative to coal. Individually these are hard to predict. On top of these issues there are seasonal weather factors at play, at a time when weather patterns are becoming more difficult to forecast.

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