Natural Gas Trade
(1) Natural gas can be transported in pipelines or as LNG. As natural gas
is inherently bulky, it cannot be economically transported in its gaseous
form by pipeline across deep oceans over long distances (over 2,500 km), even
where long distance transportation is technically feasible. Once liquefied,
however, natural gas is much more compact, occupying 1/600th of its gaseous
volume. This makes LNG convenient and safe to
handle, transport and store in large amounts as energy in liquid form. With
steady growth in demand, world trade in natural gas has also increased at
a CAGR of about 8% over the past 28 years. Between 2001 and 2002, both pipeline
exports and LNG exports grew by 4.9%. Projected increases in consumption will
require bringing new gas resources to the market. Numerous international pipelines
are either planned or are already under construction.
(2) The development of liquefaction technology, the need to transport natural
gas over long distances across oceans, coupled with cost decreases throughout
the LNG chain, has made LNG more economical, and led to expectations of strong
growth in international LNG trade. The economics of transporting natural gas
to demand centers currently depend on the market price, and the pricing of
natural gas is not as straightforward as the pricing of oil. More than 50%
of the world's oil consumption is traded internationally, whereas natural
gas markets tend to be more regional in nature, and prices can vary considerably
from country to country. In Asia and Europe,
(3) LNG markets are strongly influenced by oil and oil product markets rather than by natural gas prices. As the use and trade of natural gas continues to grow, it is expected that pricing mechanisms will continue to evolve, facilitating international trade and paving the way for a natural gas market
LNG International Trade
(1) International trade in LNG, which began in 1954, has grown to 150 bcm
in 2002.
(2) This accounts for around 26% of the total trade of natural gas internationally;
the balance natural gas is traded via pipelines.
(3) Asia Pacific accounted for about 70% of total LNG imports in 2002 followed
by Europe and North America.
(4) Japan and South Korea are the key markets for LNG, where natural gas cannot
be supplied through pipelines.
(5) Japan is the largest importer of LNG in the world, and accounted for 48.5%
of total LNG imports in 2002.
