LNG

Liquefied natural gas has been crucial in navigating through the gas market crisis, playing a key role in offsetting the shortages in Europe, with global LNG exports showing a first-half 2023 year-over-year increase of more than 4 percent despite volatilities due to facility maintenance and outages in the Northern Hemisphere summer months.

The market report and outlook comes from the 90-page Global Gas Report 2023 just issued by the International Gas Union, the global voice of the gas industry with more than 150 corporate members in over 80 countries, representing 90 percent of the global gas market and whose President is Li Yalan of China.

“In the context of the globally tight LNG supply, while it was instrumental in keeping the lights on in Europe, the unaffordable prices left some countries in Asia in the dark,” the IGU stated.

“Europe’s natural gas imports shifted from Russian pipelines towards LNG leading to a 69 percent increase in its LNG imports, reaching 124 million tonnes (169 billion cubic metres) and making Europe the biggest importing market, absorbing a significant share of the global LNG volume by outbidding other customers,” the IGU added.

The IGU noted that roughly two thirds of the additional volumes, or 30MT of LNG,came from the United States and in Asia, China reduced LNG imports from Australia and the US by a total of 21MT, while it increased imports from Qatar by around 7.4MT.

Supply shortage

The IGU also stated natural gas prices had cooled in 2023, largely due to demand-side adjustments in Europe and Asia, yet they remain above pre-Covid and pre-energy crisis levels. 

“The shortage of global supply, which was the key reason behind last year’s shocks, is still there: the market is in a state of a fragile and unstable equilibrium,” the IGU explained, citing marginal supply growth and the need for more infrastructure de-bottlenecking.

The report added that Europe's growing dependence on LNG has rendered global gas prices increasingly vulnerable to liquefaction and shipping supply risks.

Global natural gas production in 2022 stayed flat in comparison with the previous year with a marginal 8.3 Bcm uptick, which was less than a 0.5 percent increase year-on-year.

However, the IGU said that first half of 2023 saw a mild revival in global gas supply, yet the final annual result remains uncertain. 

“Looking back, the curtailment of Gazprom’s output in Russia was offset by supply growth in North America, which grew from 1,160 Bcm to 1,213 Bcm, and in the Middle East, which grew from 670 Bcm in 2021 to 687 Bcm in 2022,” the IGU said.

“In Europe, incremental production in 2022 largely came from Norway, which has been maximising output (7 percent growth year-on-year) to increase exports to the rest of the continent,” the report added.

“In Asia, gas production rose modestly from 696 Bcm in 2021 to 712 Bcm in 2022, driven mainly by higher production in China and Central Asia,” said the report.

“By contrast, Africa experienced falling gas production of 1 percent (2.9 Bcm) between 2021 and 2022,” the report stated.

Despite holding almost 9 percent of the world’s proven reserves of natural gas, Africa remains the most energy-poor continent while industries rely on expensive, inefficient and polluting sources of energy leaving hundreds of millions of households lacking modern energy access, according to a new International Gas Union report.

Gaztransport and Technigaz (GTT), the French LNG storage technology company, has completed the construction of two full containment tanks for the new Nangang LNG import terminal being constructed by the parent company of Beijing Gas Group at Tianjin port in northeast China.

GTT’s order was received from its partner company, China Huanqiu Contracting and Engineering Co. (HQCEC), for the design of eight very large storage tanks each with a capacity of 220,000 cubic metres.

“They are the world's largest onshore LNG storage tanks incorporating the GST® membrane containment technology,” said GTT.

The Paris-based company said the construction schedule remained on track despite the constraints imposed by the Covid-19 pandemic.

GTT added that the two onshore tanks were now entering the commissioning phase and would be operational in the first half of 2023.

The new Tianjin-Nangang project comprises three phases and will be the the third facility to serve the northeast Chinese port supplying the gas needs of Beijing.

The existing facilities currently include the Tianjin North onshore terminal operated by China Petroleum and Chemical Corp. (Sinopec) and had included a separate floating facility when required.

Huge project

“The construction of these first two onshore tanks marks an important milestone for BGG's LNG terminal in Tianjin,” said Philippe Berterottière, Chairman and Chief Executive of GTT Group.

“These tanks are the first of eight planned for the site and are already the largest onshore tanks in the world equipped with our GST® technology. We thank BGG and the Chinese government for their trust and wish HQCEC every success for this new terminal,” he declared.

GTT said its technology offered many advantages compared with a traditional onshore LNG tank.

This includes safer storage management through integrated monitoring and greater storage capacity for the same footprint.

“This milestone is the reward of five years of assessment, preparation, engineering and actual construction,” said Li Yalan, who is Chairwoman of the Beijing Gas unit of parent company Beijing Entreprises Group.

“We are proud to have evolved this emerging technology into a promising solution for many projects around the world,” added Li, whose is also the current President of the International Gas Union.

“Thanks to this world first, these containment membrane tanks are on their way to becoming the state-of-the-art in LNG storage. We have been impressed by the dedication and passion of GTT and HQCEC to make this world-first a success,” she stated.

The past 12 months have been the most turbulent and testing year ever for the energy industry, in particular the natural gas sector and the markets, according to the International Gas Union President Li Yalan.

The IGU President also noted in the December issue of the IGU’s monthly publication that there had also been hard times in many other sectors of the economy and for populations in general.

“The global energy crisis continues and energy markets are rocked by conflict, high and volatile prices, low supply and demand destruction,” stated Li, who was nominated as head of the IGU from the Beijing Gas Group.

“Energy consumers are directly exposed to the energy crisis, with people struggling to pay their bills due to high energy cost,” she said.

“Many had to turn down their heat this winter, several regions have had to endure power shortages and others are walking through darker streets or working remotely to conserve energy,” she added.

Coal use

“Many factories were forced to stop producing, or close down faced with unaffordable energy and deficiency in raw materials. To navigate through the crisis, many countries had to prioritize energy security over energy transition as a result we see a growing number of countries adding coal-power capacity, and increased use of coal - the
most emitting fossil fuel - all across the world, rich and developing alike,” she explained.

The IGU President emphasized that there was an upside as there were positive signals that investments were increasing for natural gas projects and for renewables and that these trends needed to continue for the global energy balance to be restored.

“As we wrap up this year and reflect on its many stresses, I hope that a key lesson that can be learned from it is that energy systems cannot be changed overnight,” noted Li.

“In the recent years leading up to this crisis, energy security became forgotten and long-term planning for secure and reliable supply was seemingly forgotten with it,” she explained.

“This crisis reminds us that energy security should be brought back in balance with economic and environmental policy considerations,” Li declared.

LI added that it was imperative that the world arrives at a “real plan” for an achievable transition toward a clean, secure and affordable energy system.

“Most importantly, it will require an honest dialogue between all key players, including the gas industry,” she said.

The International Gas Union (IGU), a global voice of the pipeline natural gas and LNG industries with more than 150 members in over 80 countries, has published the latest annual edition of the IGU Wholesale Gas Price Survey.

Global LNG trade increased by 6 percent to 385 million tonnes with economic activity picking up in several countries while supply constraints and rising demand caused significant volatility in prices as nations scrambled to secure LNG cargoes to meet gas demand for the past winter season.

Trading in the LNG sector was one of the issues covered by the 2022 edition of the “Global Gas Report” published by the International Gas Union on the occasion of the 28th IGU World Gas Conference in South Korea.

“Overall, LNG exports grew in 2021, with the US leading the way through its year-on-year increase of 23 million tonnes,” said the IGU in a report covering the past two years.

“This provided security of supply to some extent, especially in a tight market. US LNG recovered well from the cancellation of cargoes and reduced usage of liquefaction plants the previous year,” said the IGU report.

About 48 percent of US export volumes were delivered to Asia, driven by increasing demand in South Korea and China.

The IGU noted that Japan was the third-largest importer of US LNG in 2021, with the three countries accounting for over 36 percent of all US export volumes last year.

Brazil surge

LNG exports to Europe had also increased in March and April 2021, a year before the Ukraine events and after a cold winter had depleted the region’s natural gas in storage.

“Volumes decreased during the following months but increased again in the fourth quarter and peaked in December 2021, as Europe’s natural gas inventories remained low,” the IGU recalled.

US LNG exports to Brazil increased from 2.3MT in 2020 to 7MT in 2021 as an intense drought in the country limited hydro-electric power generation and led to more consumption of natural gas for power.

“LNG exports from Australia, Qatar and Russia remained stable from 2020 to 2021, while there was a decrease in volumes from Nigeria and from Trinidad & Tobago over the same period,” said the IGU report.

Pipeline exports

Pipeline natural gas export volumes also increased last year by 6 percent, mirroring the rebound of global economic activity.

“The US saw an 8 percent rise in pipeline exports to Mexico, while domestic consumption in the country remained low,” the report noted.

In the Asia Pacific region, net gas imports grew by 17 percent, with one-fifth of that incremental volume attributed to increased pipeline imports.

“This was particularly prominent in China, as import volumes rose due to weather-related factors and higher economic activity,” said the IGU.

“Russia’s pipeline export volumes increased by about 4 percent from 2020, with incremental volumes flowing to Germany, Italy and Turkey,” it added.

Europe’s pipeline imports rose by 0.5 percent in 2021, supported by an annual increase in volumes flowing from Algeria.

Russia’s pipeline deliveries to Europe declined further towards the end of the year, resulting in a tighter market and higher gas prices.

The IGU said that natural gas production levels in the Middle East increased, with Iran’s pipeline exports to Turkey and Israel’s pipeline exports to Egypt growing significantly.

The International Gas Union, the global promoter of the natural gas industry and whose membership covers 85 countries and 95 percent of the gas market, has published its latest Global Wholesale Gas price survey showing that gas-on-gas competition (GOG) in the markets continued on its upward path.

LNG Canada, the export project in British Columbia, has provided one of the greatest reconciliations ever between Canada and its indigenous peoples in terms of economic participation and is also helping to carry the province out of the Covid-19 slowdown.

Australia’s charter member of the International Gas Union (IGU), the Australian Gas Industry Trust (AGIT), has appointed its first Executive Officer, Dr Jen Thompson, to further develop core objectives of promoting LNG and gas industry research and public education.

The Gas Exporting Countries Forum (GECF), based in Qatar and known as the OPEC of natural gas, and the the International Gas Union were among the participants in a wide-ranging online discussion held by the United Nations Economic Commission for Europe (UNECE) on future LNG and pipeline gas use.

The Web gathering was entitled “99 minutes of LNG - trends, developments and innovative” and examined the need for a more vibrant natural gas industry due to the long-term benefits it brings and its key role in the energy transition.

The session was organised by the UNECE’s Group of Experts on Gas and featured speakers from the GECF and the IGU in addition to several UN member states and for leading gas companies from 10 nations, including Germany, Indonesia, the Netherlands, Nigeria, Norway, Russia and the US.

The GECF was represented by Hussein Moghaddam, Senior Energy Forecast Analyst at the Secretariat in the Qatari capital, Doha.

Moghaddam presented the latest data on Covid-19's impact on LNG markets and outlined the long-term prospects for the fuel.

The GECF has 12 members: Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela.

The seven observer-status countries are Angola, Azerbaijan, Iraq, Kazakhstan, Norway, Oman and Peru.

The current Secretary-General of the GECF is Yury Sentyurin from Russia.

During the UNECE’s event Moghaddam spoke in relation to one of the key messages which was that despite the current market environment due to COVID-19 and the oil price slump, the LNG industry was better placed than ever because of its massive contribution to decarbonising the world.

“While coal is still considered a critical source for energy security and affordability, particularly in Asia, coal development plans are being revised downward compared to previous years amidst low electricity demand and rising availability of alternative sources,” said Moghaddam .

“There is, therefore, a real opportunity for coal-to-gas switching,” he added.

“Further, gas and LNG can benefit from the climate policies being pushed out now due to their competitiveness and alignment with the UN’s Sustainable Development Goals (SDGs),” stated Moghaddam.

The GECF is a regular contributor to the discussions of the UNECE Group of Experts on Gas and took part in the UN body's summit in Geneva in 2019.

The GECF’s “Global Gas Outlook 2050” published earlier in 2020 said that gas production in GECF countries, including Qatar, would grow by almost 50 percent through 2050 to more than 2.5 trillion cubic metres, underlining the continued importance of the group.

The sixth GECF summit of heads of states is scheduled to take place in Doha in 2021.