WHY LNG is better than Pipeline natural gas?

The International Organization of Liquefied Natural Gas (LNG) Importers published a 2016 report on the development of the LNG industry worldwide, with an analysis of the status of gas developments in Brazil, Paraguay, Uruguay, Argentina and Chile.

What is certain is that the future development of natural gas is closely linked to the goals of the Paris Climate Conference on the need for countries to work together to combat climate change.This will have to be done by replacing coal with natural gas in electricity production and oil and its derivatives in transport.Of course, there are other important areas where gas could play a big role.

In terms of natural gas supply and demand, LNG has become increasingly prominent.Thirty-four countries imported LNG at the end of 2015, compared with just 15 countries in 2005.Global demand for LNG increased by 2.5% in 2015 compared with 2014, even as the global economic recession reduced demand.

Why is LNG preferred over pipeline gas?

First, the cost of liquefaction, storage and regasification has fallen dramatically, and the process is more modular.

Second, there are more sources of LNG

Third, as more and more deals are done on the spot market, people do not need to look at long-term contracts as the only option.Currently, nearly 30 per cent of global LNG trading is done on the spot market.

Signing LNG contracts on the spot market (although prices may be higher in the process due to supply and demand) allows buyers to avoid long and cumbersome contracts that require payment, which is especially convenient for e-commerce.On this basis, LNG can even be called "flexible natural gas".

Moreover, in South America, LNG has made up for the lack of hydroelectric capacity.Even in the event of a natural disaster, large quantities of imported LNG could arrive quickly.Brazil, Chile, Argentina, Colombia and Uruguay are all interested in importing more LNG.

It is notable that countries preparing to develop LNG industries are more likely to use floating storage gasification units (FSRUs) than countries that have already started developing LNG industries.Currently, Brazil has three floating storage gasification units, Argentina has two, Colombia has one and Uruguay will have one.In addition, two land terminals have been built in Chile and the third terminal will be a floating storage gasification unit.

Australia also has its first floating liquefied natural gas (FLNG) project.There is no doubt that using a ship to produce, liquefy, store gas and dump it from one ship to another is a technological breakthrough.Two more such devices are currently under construction, but there will be more in the coming years.

With five new LNG projects operating in 2016 and 2018 as shale gas production increases, the United States will position itself as the world's largest "flexible gas" producer, ahead of Qatar, and demand for gas near the Atlantic and Pacific oceans will also increase dramatically.By 2019, the U.S. will export an average of LNG9.6 Bcf per day.Australia will also increase LNG production and become the world's third largest LNG producer.In 2020, the United States, Qatar and Australia will play a more important role in the global LNG market.

The current oversupply and recession will result in a worldwide glut of LNG in the next two to four years.At that time, producers will also actively grab market share.Predictably, LNG prices will be lower than they have been in the past decade.

As mentioned earlier, imported LNG will come to market and more regasification plants will be built off the coast of South America.While Argentina, Brazil, Bolivia, Peru, Colombia and Venezuela are all expected to increase their gas production, there is still a huge shortfall in demand, which is why LNG imports are so popular.

The multi-billion dollar LNG projects are breaking down regional energy barriers, and there are signs that new LNG facilities will continue to proliferate, with development lagging behind.