The role of LNG in European energy security | Foreign Affairs - Hellenic Edition

The role of LNG in European energy security

How does the global liquefied natural gas market work
Περίληψη: 

The increased role of liquefied natural gas (LNG) in the future European energy mix will be a significant European card against Russia in the future Eurasian geopolitics and energy chessboard.

Athanasios Pitatzis is an Industrial/Petroleum Engineer and Alternate Committee Member of the Greek Energy Forum. He specializes in the development of oil & gas and power markets in the UK and the Southeast Europe and the Mediterranean. The opinions expressed in the article are personal and do not reflect the views of the entire forum or the company that employs the author.

In recent years, and especially after 2014, the Global Liquefied Natural Gas (LNG) market has evolved and transformed into a "global" and fully integrated market. There is a growing trend of competition between emerging LNG exporting countries such as the USA, Australia, and Russia, for which country will gain the largest market share of the Global LNG Market. Of course, the biggest fact regarding the Global LNG Market is the dominant position held by Qatar as the largest exporter of the Liquefied Natural Gas (LNG).

25012018-1.jpg
Global Gas Trade through Pipelines and Liquefied Natural Gas (LNG) in 2016 and forecast for 2040, Source: International Energy Agency, World Energy Outlook 2017, https://www.iea.org/weo2017/
-------------------------------------------------------------------------------------

According to the above graph, the global gas trade in 2016 was 706 billion cubic meters, of which 39% was LNG, so 282.4 billion cubic meters of natural gas transported via LNG ships. It is also predicted by the International Energy Agency (IEA) that the global gas trade in 2040 will be 1.230 billion cubic meters or 1,230 trillion cubic meters, of which 59% will be transported via LNG Ships.

The Global LNG trade will play a vital role in the future energy security of Europe and Southeast Asia.

25012018-2.jpg
Top Global LNG exporters for 2016, Source: U.S Energy Information Administration (EIA), EIA: Malaysia Oil Market Overview, Hellenic Shipping News Website, http://www.hellenicshippingnews.com/eia-malaysia-oil-market-overview/
-------------------------------------------------------------------------------------------

According to the diagram above, the top Global LNG exporters for 2016 were, Qatar, Australia, Malaysia, Nigeria and Indonesia. A complicated commodity market, which will cause many geopolitical upheavals over the next fifteen years into the global geopolitical energy ecosystem. Some of these upheavals will be:

- Establishment of the global geopolitical hegemony of the US not only military via aircraft carriers but also economically through LNG export ships, which will deliver shale gas from the USA to the rest of the world. Of course, we should emphasize that to maintain and increase the USA its gas production, tens of billions of dollars have to be spent in exploration and production of conventional and non-conventional natural gas fields. Shale gas production is a difficult process, and maintaining production at high and commercial levels will be one of America's biggest oil industry's challenges for the next decade. Exploitation costs will play an important role in the final sale price of US LNG on world markets and whether it will be competitive.

25012018-3.jpg
US Exports of Liquefied Natural Gas (LNG) from 2000 to 2016 and forecast up to 2040, Source: U.S Energy Information Administration (EIA), Liquefied natural gas exports expected to drive growth in U.S. natural gas trade, https://www.eia.gov/todayinenergy/detail.php?id=30052
-------------------------------------------------------------------------------------------------

• Currently, there is only one active LNG export station, Sabine Pass, in Louisiana, the well-known Cheniere Energy Company. It is still planned to start operating another five new LNG export terminals/terminals by 2020. According to the US Energy Information Administration (USA), the USA will become the world's third-largest LNG exporter by 2020 after Qatar and Australia, following the construction of the below terminals:
-Cove Point, Maryland Export LNG Terminal
-Cameron, Louisiana Export LNG Terminal
-Elba Island, Georgia Export LNG Terminal
-Freeport, Texas Export LNG Terminal
-Corpus Christi, Texas Export LNG Terminal

25012018-4.jpg
U.S Liquefied Natural Gas Export Capacity, Source: U.S Energy Information Administration (EIA), United States expected to become a net exporter of natural gas this year, https://www.eia.gov/todayinenergy/detail.php?id=32412
-----------------------------------------------------------------------------------------------------