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Editorial comment

Last winter, LNG played a starring role in keeping Europe’s lights switched on following the start of the Russia-Ukraine conflict. The International Gas Union (IGU)’s latest ‘World LNG Report’ outlines how LNG demonstrated its essential value as a flexible, reliable and available energy resource during the most turbulent year in the history of gas markets.1

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Europe imported 66% more LNG in 2022, with 44% of the continent’s total imports coming from the US. Despite the Freeport LNG terminal being taken offline following an accident in June 2022, US producers exported 55.2 million t of LNG to Europe last year, a 148% increase compared to the previous year. This accounted for 69% of the country’s LNG exports in 2022.

Throughout the last year, record new regasification capacity was approved, with some projects fast-tracked. The IGU reports that more than 10 European markets have initiated the construction of new infrastructure since the outbreak of the war in Ukraine, including 26 projects with a combined regasification capacity of 104.5 million tpy. Of these projects, six have been commissioned, and four terminals have taken final investment decisions (FIDs) and are under construction. The IGU also notes that approximately 70% of this new capacity will come from floating terminals.

The fact that Europe could turn to LNG in its moment of need illustrates the fuel’s essential role in assisting with global energy security. The IGU’s report states that, as of April 2023, “the global LNG trade connected 20 exporting markets with 48 markets with importing infrastructure, and an increasingly globalised LNG market made it possible to re-route massive volumes of energy in a matter of months.”

But LNG’s special quality extends beyond its flexibility, which ultimately improves energy security worldwide. It also has a key role to play as a transition fuel in the push for cleaner energy. It can replace oil and coal, and accelerate the integration of renewables. The IGU also points out that there is a significant opportunity to minimise the lifecycle emissions of LNG today by decarbonising the liquefaction segment of the value chain. And, looking to the future, the sector is developing its decarbonisation pathways, with examples including renewable natural gas or biomethane, blue and green hydrogen, ammonia, e-methane, and carbon capture, utilisation and storage (CCUS).

However, a lack of investment is impacting both producers and consumers, and this needs to be addressed to ensure that LNG can continue to play its important dual role. The IGU’s President, Li Yalan, explains that a lack of sufficient supply drove the world spot prices to record highs last year, which resulted in many consumers choosing dirtier fuels or even shutting down operations altogether. Strategies to future-proof investments in gas infrastructure are key to ensuring that LNG can help the world securely continue on its path to net zero.

  1. World LNG Report’, International Gas Union (IGU), (2023).

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