Liquefied Natural Gas (LNG)

1           Introduction

Liquefied Natural Gas (LNG) is a composition of the methane and ethane, and it is used as an alternative of petroleum. The benefit of using LNG is that its emission is less as compared with petroleum, in many countries, demand for LNG is increasing due to some natural and financial benefits. LNG is easy to store, and it can be moved from one place to another. The LNG has an impact on the recovery of the economy; the report will discuss the benefits of using LNG to the people and the economy. Further, the report will also discuss how LNG is supporting the economy of a country, although the application may be limited with some countries, it is giving advantage to many economies.

2           Discussion

LNG is the liquid form of the natural gas, to make the gas state into the liquid, the natural gas is cooled at a level of -256F. Due to the cooling, the space it takes is around 1/600^th of the space it takes in the natural gas form. This goes give not only ease important but also transport. Before that, the oil was the only liquid form of transportation, and due to increase in the demand of natural resources the demand for alternate has also increased and the alternate, i.e. natural gas (Idris, 2012).

2.1         Liquefied Natural Gas (LNG) uses

The primary use of LNG is to transport the natural gas from one place to another; the natural form of gas is not easy to transport from one economy to another. It is hard to store the natural gas, and the liquefied state of gas given an opportunity to store it without have too expensive storages as it is in the case of natural gas. The storage through the liquid form is safe and secure as compares with the natural gas; it gives ease to transport it. The transportation of the natural gas is not easy, this is why countries with high capacity of natural gas reserves could not enjoy the benefits, because it is not always safe to transport the gas through pipelines, and other means of transportation for the natural gas. The liquid form of gas is taking less space for storage and transportation.

Once the gas is taken ion the liquid form, then it is given time and space to convert it into the natural form, then it can be used like natural gas. Many regions in the world are now using the vehicles, either on-road or off-road to use natural gas, because the natural resources are limited, the high emission of petroleum makes it less attractive to be used. The uses of nature are not only limited to the vehicles, but other machinery and plants can be run on the natural gas. The natural gas is used as a fuel or as raw material because the natural gas is used as a heating or cooling system in most of the US houses, and other regions of the world.  The natural gas is also used as electricity production, many plants are using natural gas to produce electricity, and in that case, natural gas is used as a raw material for electricity production. The natural gas is also used as a means to cook the food, and natural gas has the competency to meet the wide range of the needs of the customers around the globe. The natural gas is comparatively cheap as compared with petroleum products, and this makes it more attractive. As per the fact that the emission is less with the gas products, and relatively cheap is making it more attractive and its uses are more than many, this makes the natural gas more important. The liquidate form give its efficiency to store and transport; this is why each economy around the world is taking advantage of the natural gas (Logan et al., 2012).

The uses of natural gas are more than many, but it was not easy to excess in the past. Still, now its liquid form has increased its mobility, and this is why the world is moving towards natural gases and replace petroleum products. The uses of natural gas are more than petroleum products; this makes it more attractive for the economies.

2.2         Economic Benefits of using LNG

2.3         Factors affecting the demand for LNG

The demand for LNG is increasing because the regions rich with natural gas like Russia, Iran, Qatar and many others to generate revenues through exporting the natural gas in liquid form to the whole world. The regions with the high demand of the gas, are taking advantage of importing gas rather than petroleum products to save the money and the nature as well, in current position Japan is the largest importer of LNG (McGlade et al., 2018).

The natural resources are limited, and petroleum products are expensive, and its emission is high, this is why the demand for the LNG is increasing. The demand for natural gas is also increasing due to the increase in the industries in the world, that ask for natural gas, and due to carbon emission, many companies are moving towards the machinery with natural gas, because of less carbon emission and running costs. This is also affecting an increase in the demand for LNG (Fankhauser and Jotzo,  2018).

The price is always a reason for changes in the demand for natural gas; in the current position, the alternates are fuel products, solar energy, wind energy and many more. The supply of gas is limited because it is not renewable resources like solar and wind energy, this is why its best competitor is petroleum because petroleum product supply is also limited. It is not a renewable source (Zamani, 2016).

Figure 1 Demand for LNG 1990-2018

Source: (International Gas Union, 2019)

As per the picture is given above, the demand for LNG is increasing continuously, supporting that the many economies are taking advantage of LNG. The countries have a high capacity now to produce more LNG, there are several countries involved in LNG supply or demand; the reason is its advantage. The LNG importing countries number is higher than the number of exporting LNG products, indicating high demand for and the number is regularly increasing. This is a clear indication that in future, the demand will increase, as the countries get an opportunity to replace petroleum with gas, then they will follow the same trend to import LNG.

There is an ongoing effort by China to increase the urban air quality; this is why they are more focusing on the natural gas machinery and vehicle to improve the environment. China imported 16 MTN of LNG in 2018, the ratio is 40% higher than its previous year imports, and it is more from China to make the environment clean. The remarkable increase in imports is supporting their future view. It is excepted that the import by China will increase soon. The LNG demand in the whole world has increased as an overall basis because LNG total demand in the whole world increased by 27 MTN in 2018 with a total demand of 319 MTN, as compared with 292 MTN in 2017. The global demand is expected to reach the level of 384 MTN during 2020 (Shell, 2019).

2.4         LNG as the supporting factor for the economic recovery

LNG is the supply of gas in an economy; the growing demand for LNG is asking for investment in the country; this will increase the capital and employment in the economy. The demand for fuel is increasing either it is petroleum or natural gas, the supply for petroleum is limited, and the natural gas can replace the petroleum, this is why the demand for natural gas will result in increase in the labour and material demand, ultimately the benefit will be in the hands of the economy. The country that is exporting with generates extra funds, and the country that is important can import cheaper fuel as compared with the oil. This will result in a benefit to economies, one with the increase in revenue and the other one with the cost savings.

The economy will take advantage to meet the growing energy demand with a cheap source, and the income of people will rise due to the investments in LNG. The cheap energy will give benefit to having more funds left after meeting the expenses, and this will give advantage to the economic recovery. The use of natural gas will reduce the negative effect on the environment due to energy production and consumption. This will reduce to cost to clean the environment as well; this is why benefit will flow with the many companies who are spending much on cleaning the environment. The cost-saving will result in an increase in investments, and investment will ultimately result in an increase in employment and recovery of the economy (APEC, 2019).

The high increase in demand for liquidating natural gas is resulting from the basic concept of saving in terms of money and less emission. This is why the industries and the general public is more attractive towards the natural gas, although the use of natural gas is different, the ultimate benefit will flow to the economy. The country with high natural resources are investing more on the plants to deliver the liquidate gas; the Polish economy is ready to deliver the pipeline project for $6.8 billion, that will deliver the liquidate natural gas to a wide range of international customers. The use of pipeline will deliver the gas in the short-run; this is why the demand is expected to increase. As per the report, the prices of natural gas is 79% of oil prices, making its demand to increase in the near future as a result of the EU. The economy will take advantage either the seller of natural gas, or the buyer of natural gas, the increase in demand for gas will give extra revenues to the seller and the cost savings to the buyers; as a result, the economy will take advantage (LNG, 2019).

The new trend to use natural gas have boosted the sales of liquidating natural gas because the use of natural gas consumption and demand has jumped in China and USA. These two are the large economies if they are moving towards the natural gas consumption despite any reason, the high increase in demand will ask for natural gas reserve economies to boost the production of liquidating natural gas. As a result, new projects will be installed, like the one discussed above to facilitate these economies, in Asia Japan is the economy with high natural cash demand, this is why Asian countries can take advantage through pipeline supply of liquidating gas to Japan, and the benefit will flow to both economies. The pipeline will require heavy investment, and as a result, this will involve many economies; as a result, the economic recovery will take place in many countries (Sommers, 2019).

3           Conclusion

As per the discussion above, the liquidate natural gas is taking advantage of the mobility of natural gas, this is why the gas is giving competition to petroleum. The reason for the high demand is due to its low emission nature, the high number of uses, and it is relatively cheap as compared with petroleum products. The demand for LNG is increasing rapidly, and meeting the growing demand new projects are taking place, now pipelines are used to deliver the gas. The increase in the projects will result in economic recovery because it is creating more capital investments, increasing jobs, and profitability to many economies.  These are the facts supporting the LNG being one of the reasons for economic recovery in many small regions of the world, because the benefit will flow through extra revenues, cost savings, increase in capital and increase in employment.

4           References

International Gas Union. (2019). 2019 World LNG Report. [Accessed on 04 Dec 2019]. Available at <https://www.igu.org/sites/default/files/node-news_item-field_file/IGU%20Annual%20Report%202019_23%20loresfinal.pdf>

APEC. (2019). APEC Energy Demand and Supply Outlook 7th Edition – Volume I. [Accessed on 04 Dec 2019]. Available at <https://www.apec.org/Publications/2019/05/APEC-Energy-Demand-and-Supply-Outlook-7th-Edition—Volume-I>

Mike Sommers. (2019).  US  LNG Exports Deliver Economic, Environmental Benefits.  [Accessed on 04 Dec 2019]. Available at <https://www.api.org/news-policy-and-issues/blog/2019/07/11/us-lng-exports-deliver-economic-environmental-benefits>

Idris, M. N. (2012). Review on global investment on liquefied natural gas (LNG) projects and development: targeting on reduce flaring, cleaner and energy efficiency. Journal of Petroleum and Gas Exploration Research, 2(8). [Accessed on 04 Dec 2019]. Available at <https://www.interesjournals.org/articles/review-on-global-investment-on-liquefied-natural-gas-lng-projects-and-development-targeting-on-reduce-flaring-cleaner-an.pdf>

Logan, J., Heath, G., Macknick, J., Paranhos, E., Boyd, W. and Carlson, K. (2012). Natural gas and the transformation of the  US  energy sector: electricity (No. NREL/TP-6A50-55538). National Renewable Energy Lab.(NREL), Golden, CO (United States). [Accessed on 04 Dec 2019]. Available at <

Zamani, N. (2016). How the crude oil market affects the natural gas market? Demand and supply shocks. International Journal of Energy Economics and Policy, 6(2), 217-221. [Accessed on 04 Dec 2019]. Available at < https://econjournals.com/index.php/ijeep/article/viewFile/1958/1303>

Fankhauser, S. and Jotzo, F. (2018). Economic growth and development with low‐carbon energy. Wiley Interdisciplinary Reviews: Climate Change, 9(1), p.e495. [Accessed on 04 Dec 2019]. Available at < https://escholarship.org/content/qt8v6450b7/qt8v6450b7.pdf>

McGlade, C., Pye, S., Ekins, P., Bradshaw, M. and Watson, J., (2018). The future role of natural gas in the UK: A bridge to nowhere?. Energy Policy, 113, pp.454-465. [Accessed on 04 Dec 2019]. Available at < http://sro.sussex.ac.uk/id/eprint/71948/1/1-s2.0-S0301421517307693-main.pdf>

Shell. (2019). Shell LNG outlook 2019. [Accessed on 04 Dec 2019]. Available at <https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook-2019.html>

LNG. (2019). Benefits for Poland. [Accessed on 04 Dec 2019]. Available at <https://lng.edu.pl/en/about-lng/economic-benefits/benefits-for-poland/>