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Market Trends

Global LNG Trade

In the last 50 years, LNG trade has grown on average at 11% per year, from 2.6 MT in 1971 to 356.1 MT in 2020. The growth was steadily positive (except 1980-81 and 2012) with 40% of the time double-digit growth rates.

The cumulated number of LNG deliveries exceeded 110 000 in 2020.

In 2020, LNG has been delivered to 43 different markets around the world. The number of LNG importing markets has been multiplied by almost 5 since the 1990s with the most significant additions in the 2009-2016 period.

There is a growing need for market flexibility, which has led the share of spot and short-term LNG trade to increase from 5% in 2000 to 40% in 2020.

 

LNG Infrastructure

  • Liquefaction

Global liquefaction capacity stands at 456.6 MT.

During the last 30 years the number of exporting countries has more than doubled, leading to an increased diversification of supply sources.

While liquefaction capacity has grown steadily over the years, the last 5 years (2015-2020) were marked by an acceleration of the liquefaction capacity growth. This was primarily due to the rise of the USA as an LNG exporter, and expansions in Australia and Russia.  

The completion of the 1st wave of US LNG projects has set an end to the expansionary cycle and the market is now observing a slowdown in the additions of liquefaction capacity.

  • Regasification

Global regasification capacity stands at 974 MT, of which 136 MT is floating-based, i.e around 14% of total regasification capacity.

While regasification capacity gas been growing steadily, the highest growth rates in regasification capacity were observed during the decade 2000-2010, during which capacity grew at 9% per year on average, followed by the 2010-2020 decade at 5% per year.

While regasification capacity continues to be built, the majority of which in Asia and Latin America, the growth rate has recently slowed down.

Source of LNG Imports

  • By Region

Asia is the leading importing region. The largest Asian LNG importers are China, Japan, South Korea, India and Taiwan.  In 2020, Asia imported 254.4 MT, accounting for 71% of global LNG imports.

The Asian continent is currently driving demand growth, notably led by growth of LNG imports into China, which has overtaken Japan as the largest LNG importer.  

In 2020, Europe imported 81.6 MT of LNG.  The main importing countries in 2020 where Spain, the United Kingdom and France. Europe is a residual market for LNG and has acted during the past years as a balancing market, showing since 2019 an increase in its LNG imports. LNG imports into Europe are usually triggered by price differentials between Asia and European markets.

In 2020, America, driven by Chile, Brazil, Mexico and Argentina imported 13.2 MT, and the Middle East and Africa imported a combined 6.9 MT.

  • By Basin

In 2020 the Pacific Basin accounted for 146.2 MT with 41% of global LNG supply, the Atlantic Basin 117.4 MT and the Middle East 92.6 MT.

While the Pacific Basin remains the largest source of LNG supplies, the Atlantic Basin is the only region which experienced growth in 2020, thus narrowing the gap between both basins. After years of expansion of Pacific supply (since 2016), suppliers from the Atlantic basin are strengthening their share with US and Russian LNG.

LNG Routes

Additional supply from the Atlantic Basin has led to the emergence of new trading patterns:

  • Balancing between Europe and Asia is provided by swing LNG suppliers (such as Qatar and the USA).
  • While Yamal LNG volumes are mostly destined for Europe, flexible US LNG volumes get delivered to either Europe or Asia depending on market conditions.
  • Australian supply underpins Asian growth.

Contracts 

Long-term contracts represent the greatest share of contracts signed, but their time duration has been reduced over time. The average length of contracts is cyclical, meaning longer term contracts are signed for new projects to guarantee project economics, while expiring contacts are replaced by shorter ones.

2021 outperformed 2020 in terms of volumes of signed contracts.

  • An increasing number of 10-year contracts is observed, pushed by trading companies and portfolio players.
  • Pricing formulae of recently signed contracts are linked to a variety of indices: oil, JKM, TTF, AECO, mixed.
  • Portfolio players and trading companies play a growing role in new contracts.

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Benefits of LNG

LNG IS THE CLEANEST BURNING FUEL

LNG and natural gas are playing a significant role in enabling the energy transition and providing a quick switch from dirtier energy sources like coal or heavy fuels to a cleaner alternativ

When used in power generation, natural gas emits 45% to 55% lower greenhouse gases emissions than coal.

In the industrial sector, LNG and natural gas provide a clean solution to those industrial sectors which need a high calorific fuel in their production process, and which are the most difficult to electrify.

In developing economies, it will replace traditional biomass in heating and cooking, helping to reduce the health impacts of localised emissions from other fuels.

In the transport sector, LNG has also shown significant reduction in emissions (both greenhouse and particulate) compared to traditional fuels, and is helping diversify the fuel mix and reduce air pollution as a fuel for heavy duty road transport and shipping.

These advantages suggest a central role for natural gas in the energy transition. In its New Policies Scenario, the IEA expects that use of natural gas could increase by 45% over the next 25 years. Developing countries are expected to account for more than three-quarters of that growth.

AMPLE FUTURE SUPPLY FOR NEW PROJECTS

Natural gas and LNG is an abundant, secure and flexible source of energy and the high levels of anticipated demand can easily be met by known levels of recoverable natural gas resources. As technology advances, so does our ability to unlock the world’s natural gas resources. Today, global proven gas resources stand at 769 trillion cubic metres, enough to supply global gas demand for 219 years at current levels of demand.

There is ample LNG supply on the horizon: many potential LNG projects are currently being proposed worldwide, compared with a current consumption of 354.7 million tonnes.

There has been rapid growth in the number of countries supplying LNG, almost doubling between the start of the century and 2019. This has significantly increased the flexibility and security of gas supply options for importing countries.

LNG PROVIDES AFFORDABLE ENERGY ACCESS

In 2020 LNG provided affordable energy access to 43 markets with a combined population of over 5 Bn people.

Since 2000, the number of LNG importing countries has quadrupled.

In 2020:

  • LNG regasification capacity amounted to 947 MTPA
  • LNG liquefaction capacity amounted to 454 MTPA

In a continuous evolving market,  different small-scale solutions have also been developed tailoring customer needs. These include: small liquefaction plants, small regasification plants, bunkering services etc.  Floating solutions often provide quick access to LNG markets at a lower cost than traditional onshore facilities.

A complete picture of the World LNG Infrastructure can be viewed here.

LNG ENABLES COAL TO GAS-SWITCH IN POWER GENERATION

Natural gas plays a key role in power generation, since burning natural gas in combined gas-fired powered plants, has proved to be more efficient and cleaner than burning other fossil fuels, like coal.

On a lifecycle basis, studies have concluded that LNG emits around half the greenhouse gas emissions that coal does when burnt to generate electricity.

Compared to a typical new coal plant, natural gas emits 50 to 60% less carbon dioxide (CO2) when combusted in a new efficient natural gas power plant. Using natural gas to substitute all coal consumed in power generation would reduce COemissions by 1,200 Mt. Regions like Asia Pacific, show a huge potential for conversion.

However, the gas industry is challenged by greenhouse gas emissions over the lifecycle of the entire gas value chain. Some claim that the intrinsic benefits of gas may be limited or even negated by upstream methane emissions, and, in the case of Liquefied Natural Gas (LNG), the extra energy required for liquefaction.

LNG SUPPORTS THE INTEGRATION OF INTERMITTENT RENEWABLES

LNG supports the integration of intermittent renewable electricity. Many countries with a high share of LNG imports, use the regasified LNG (i.e. natural gas) to produce electricity through gas fired-powered plants when the sun is not shining or the wind is not blowing.

In Spain for example, where LNG represented 57% of the total gas supply in 2019, LNG acts as an enabler to renewable energy, by providing a clean, flexible and a reliable alternative when electricity generation from renewable energy is low.

LNG FUELS CLEAN GROWTH IN INDUSTRY

Increasing use of cleaner-burning natural gas in industry, where it displaces coal and oil, offers the potential to significantly reduce greenhouse gas emissions and air pollution in the sectors which are hard to electrify.

  • Light Industry

In light industries, the use of small boilers heated by coal are a major cause of local air pollution. Displacing coal and diesel with gas boilers can make a significant contribution to lower greenhouse gas emissions, improved air quality and cost reductions.

  • Heavy industry

The heavy industry is amongst the hardest sectors to electrify. In the iron, steel, cement, and chemical production processes, hydrocarbons are required to produce high temperatures or chemical reactions, and therefore need a fuel with a high calorific power.

In these sectors, displacing coal with natural gas can make a significant contribution to lowering greenhouse gas emissions and improving air quality.

LNG IMPROVES ENERGY SECURITY

LNG can be imported from 22 different sources, making it an accessible and available fuel, which can be procured flexibly and easily.

Adding LNG import points, increases security and diversification of supply, providing access to a wide number of LNG sources, helping to reduce in some cases, the dependence from other energy sources.

Furthermore, LNG can be stored in LNG tanks or once regasified it can be stored in underground gas storages, allowing to increase the security of supply, and benefit from the summer-winter spreads.

The quick access to multiple LNG sources, enables to cover from power supply shortages in a short timeframe, and avoids to burn liquid fuels and high carbon coal in case of disruptions.

ENABLING CLEAN MOBILITY

In the transport sector, LNG is already available and reduces greenhouse gas emissions and improves air quality compared to conventional fuels – particularly in heavy duty road transport and shipping which are the most difficult to electrify due to the need to secure high on-board energy capacity storage.

Replacing liquid conventional fuels in the freight transport, both of road and maritime, is highly challenging because of the high energy density of these products and the wide distribution system already in place for so many decades. With an energy density (in volume) 40% lower than diesel, LNG is a lower carbon fuel suitable to cover a wide range of transport applications, from road to maritime.

LNG as a transport fuel, offers numerous environmental advantages and helps improving air quality, namely in cities and ports.

 

  • Maritime Transport

LNG offers environmental advantages over traditional marine petroleum fuels. It is the least polluting marine fuel both in terms of greenhouses gases and local pollutants. It is a solution to the tighter environmental rules and regulations set by the International Maritime Organisation (IMO) and by regional air quality controls.

According to the different engine technologies, switching from conventional fuels (HFO) to LNG offers up to 28% at the exhaust CO2 emissions reduction. Depending on the analysis and types of engines the CO2 reductions can vary in the different ranges:

Tank to Wake: between 18 to 28% for 2-stroke slow speed engines and between 12 to 22% for 4-stroke medium speed engines

– Well to Wake: between 14% to 21% for 2-stroke slow speed engines and between 7% to 15% for 4-stroke medium speed engines

LNG is compliant with IMO’s sulphur regulation and emissions reduction targets and comes as an immediate answer to the IMO sulphur cap with effect since January 2020.

A new generation of vessels (ferries, cruise-ships, bulk carriers, container ships…) are able to use LNG and thus significantly reduce the pollution from maritime shipping operations.

In terms of air pollutants:

  • Compared to current heavy fuels, LNG’s sulphur (SOx) content is 1,000 times lower than the IMO 0.5% target, which makes it compatible with the IMO 2020 global sulphur cap.
  • LNG reduces NOx emissions by up to 80% compared to the traditional heavy-fuel oil (HFO) used in the shipping sector.
  • LNG is able to deliver Particulate Matter (PM) reduction of up to 99 % compared with HFO operation.
  • Road Transport

LNG is one of the most promising solutions to achieve emissions targets for heavy-duty vehicle emissions. When switching from conventional fuels (HFO) to LNG, current engine technologies are providing 20% reductions. In particular, when looking at emissions savings from LNG compared to diesel – which represents today 98% of all heavy-duty applications, natural gas combustion provides a 23% CO2 emissions reduction for the same content of energy (56.4 g CO2/MJ vs 73.2 g CO2/MJ).

Moreover, with the increasing development and use of synthetic and BioLNG, the road transport sector could see its GHG emissions reduced by up to almost 100%, achieving net-zero emissions

Also, LNG for road transport provides significant reductions in terms of air pollutants:

  • NOx emissions result lower with natural gas compared to Diesel under real driving conditions. NOx emission from LNG trucks are reduced by a range from 40% to 75% compared to Diesel according to the different operating conditions.
  • Particulate Matter emissions from LNG engines are negligible due to the gaseous nature of the fuel. In term of mass, generation of particles compared to Diesel is reduced up to 95%.
  • SOx is almost negligible.

Enabling Competitive and Cleaner Transport – GIIGNL (2019)

LNG IMPROVES AIR QUALITY

LNG does not only reduce greenhouse gas emissions but also air pollutants.

The rapid growth of cities is focusing attention on the environment and health impacts associated with air pollution from electricity generation, particularly when power plants are located close to urban centres.

In power generation, replacing coal with gas in electricity production is a must, as it is the most effective way to quickly reduce pollutant emissions such as SOx, NOx and particulate matters, by up to 99%.

In the industrial sector, displacing coal with natural gas can make a significant contribution to lowering greenhouse gas emissions and improving air quality.

In China, for example, a major policy programme to substitute coal boilers with natural gas boilers in North East China allowed to improve air quality of air in the Beijing region and to decrease the volume of air pollutants by 80% over the last 5 years. As Beijing gas demand was boosted, air pollution was dramatically and quickly reduced.

In the transport sector, LNG in maritime and road transport can quickly improve air quality in ports and cities, since it provides a significant emission reductions compared to conventional fuels – particularly in heavy duty road transport and shipping which are the most difficult to electrify.

GLOSSARY

Please find here the terms most frequently used in the liquefied natural gas area and their explanation.

A - F

Associated Organisations

Organisations that have similar interests and that undertake similar activities in order to benefit the LNG industry.

Boil-off

The amount of LNG which evaporates from the tank during transportation or storage.

Boiling Point

The “boiling point” is the temperature at which a liquid boils or at which it converts rapidly from a liquid to a vapour or gas at atmospheric pressure. The boiling point of pure water at atmospheric pressure is 100°C (212 °F). The boiling point of LNG varies with its basic composition, but typically is -162°C (-259 °F).

CNG

Compressed natural gas: natural gas in its gaseous state that has been compressed.

FERC

Federal Energy Regulatory Commission

G - K

Gasnaturally

A campaign which aims to showcase the essential role of natural gas in the forthcoming energy transformation in Europe.

HH

Henry Hub (reference hub used for gas pricing in the United States)

ICP

Indonesian Crude Price

JCC

Japan Crude Cocktail (price used as a reference for LNG pricing in Asia)

L - R

Liquefaction

In order to obtain maximum volume reduction, the gas has to be liquefied through the application of refrigeration technology which makes it possible to cool the gas down to approximately -162 °C (-256°F) when it becomes a liquid. It is called the liquefaction process.

MMBtu

One million British Thermal Units. The Btu is the standard unit of measurement for heat. A Btu is defined as the amount of energy needed to raise the temperature of one pound of water one degree Fahrenheit from 58.5 to 59.5 degrees under standard pressure of 30 inches of mercury.

NBP

National Balancing Point

Regasification

It is the process of warming LNG until liquid gas returns to a gaseous state.

Regasification terminal

Marine or waterfront facilities in which LNG carriers deliver the LNG. LNG is then stored before undergoing regasification, which converts the LNG back into its gaseous form.

S - V

TPA

Third Party Access

TUA

Terminal Use Agreement: contract – generally long-term – to book regasification capacities on a terminal

VCP

Voyage Charter Party. A standard agreement specifically designed for short-term LNG shipping.

W - Z

TPA

Third Party Access

TUA

Terminal Use Agreement: contract – generally long-term – to book regasification capacities on a terminal

VCP

Voyage Charter Party. A standard agreement specifically designed for short-term LNG shipping.

FAQ

Please find below the most frequently asked questions regarding the GIIGNL, LNG (liquefied natural gas), its industry and the safety rules and orther regulations governing it.

What is GIIGNL?

GIIGNL is a non-profit organisation whose objective is to promote the development of activities related to LNG: purchasing, importing, processing, transportation, handling, re-gasification and its various uses.

How do I become a member of GIIGNL ?

To become a member of GIIGNL, you must meet the eligibility criteria as described in GIIGNL’s by-laws.
If you meet the membership criteria, please fill an application form and return it to the central-office of GIIGNL at central-office@giignl.org. Your application will be reviewed and submitted to the Executive Committee of GIIGNL. The Executive Committee will then submit your application to the General Assembly – where you will be invited – for final approval by all members.

How can I contact a member of the GIIGNL ?

To contact a member of GIIGNL, please scroll through our members directory in “Our Members”. You may also contact the GIIGNL Central-Office directly in case of specific requests.

What is LNG?

LNG stands for Liquefied Natural Gas.
In French, Spanish, Portuguese, or Italian-speaking countries, the abbreviation GNL is used in place of LNG. Natural gas comes from deep in the earth and is extracted through specially-drilled wells. It comes to the surface either as gas or in association with oil. Natural gas at the well head is made up of many constituents including methane, propane, ethane, butane, pentanes, nitrogen, water, and other impurities. The gas is processed at a gas processing plant where most of the impurities and water are removed. Then the natural gas is sent to a liquefaction plant, where additional gas processing removes the rest of the water vapour, other impurities such as mercury, sulphur compounds, and carbon dioxide from the gas. A refrigeration process turns the gas into a liquid. LNG is predominantly methane, with small amounts of ethane, propane and perhaps some butane. LNG appears as a colourless, odourless clear fluid, with about half the density of water. It is generally handled at slightly above atmospheric pressure in large bulk storage tanks and at around 4.5 bar when carried by truck. The temperature of LNG is typically -162°C (-259°F), which is a very low or cryogenic temperature.

Why liquefy natural gas?

The conversion to a liquid reduces the volume of natural gas by about 600 to 1, which means one LNG ship can transport enough LNG to equal 600 ships carrying natural gas at atmospheric pressure. Liquefying natural gas makes it feasible to transport natural gas in bulk and to store it in preparation for vaporisation and supply into pipelines.

How do you liquefy natural gas?

Natural gas is cooled by a large refrigeration system. First, produced natural gas is processed to condition it for liquefaction by removing components which would freeze such as water vapour and carbon dioxide. In this processing step, other contaminants such as hydrogen sulphide and heavy metals are also removed. If commercially desired, heavier hydrocarbon liquids such as propane and butane are sometimes removed. The remaining natural gas, predominately methane with small amounts of ethane, propane and perhaps some butane, is then cooled by a refrigeration system working on the same basic principles as a refrigerator or an air conditioner. The main difference is the sheer scale of the plant used to produce LNG.

Where does the LNG come from?

The LNG primarily comes from areas where large gas discoveries have been made, such as Algeria, Australia, Brunei, Egypt, Equatorial Guinea, Indonesia, Libya, Malaysia, Nigeria, Norway, Oman, Qatar, Trinidad, and the United Arab Emirates. Some LNG is produced in the US (Alaska) and Europe. For existing and potential import terminals, there is now an increasingly diverse choice of LNG supply sources.

In theory, LNG can be produced wherever natural gas is available. Domestically, pipeline natural gas is also liquefied and stored in peak-shaving facilities around the world (including the US, Europe, and Japan) as an alternative means of storing gas for future use, typically during periods of high, or peak, demand.
LNG import/export projects are based on the economics of surplus gas supplies at a low price at the source, reasonable transport distances at moderate costs, and demand at attractive prices at the destination. The resultant “gross margin” generated by this formula must be sufficient to provide a reasonable rate of return on the required capital investment. The gas surplus may be the result of a natural gas produced in conjunction with oil production (associated gas) or large “dry gas” discoveries (unassociated gas). In either case, the local market usually is too small to consume the production, and pipelines are uneconomical for delivering the gas to consuming regions. Thus the economic value is low or non-existent. For European countries and the US Atlantic Region, Algeria and Nigeria meet these criteria as major suppliers, as well as Trinidad for the US Gulf Coast Region. Depending on market prices, several existing exporters are available including Australia, Brunei, Indonesia, Malaysia, Oman, Peru, Qatar, Russia, Trinidad and the US, most of which supply LNG to Japan, Korea and Taiwan.

How is LNG transported by sea?

LNG is transported in large, specially-designed ships, known as LNG carriers. There are about 300 ships in the worldwide LNG fleet and about 100 more are on order. The cost of LNG ships today is between US$ 225-250 million for a 135,000 cubic metres (m3) carrier up to about US$ 300 million for the larger ships.

LNG ships have design features aimed at a high degree of safety. They are double-hulled and have ballast tanks separate from the cargo tanks. As the cargo is very cold, the cargo tanks are separated from the hull structure by thick insulation. There are from four to six separate cargo tanks. The two cargo tank designs commonly used are membrane tanks and spherical tanks.

The cross section of membrane tanks is essentially the same shape as the ship hull. The metal membrane inside the insulation provides the liquid containment, as does a redundant secondary barrier, should a failure occur to the primary barrier. The cargo hydrostatic and dynamic loads are carried by the insulation through to the hull structure external to the tank.

The spherical tank design incorporates freestanding insulated cargo tanks which are designed for liquid, vapour pressure (1.2 atmosphere absolute pressure or less), and dynamic loads. Spherical tanks are supported at the equator by cylindrical skirts to the hull. All ships carry their cargo at very low-pressure, usually less than 150 kPa (mbar) above atmosphere pressure.

As both designs have proved safe and reliable in service, the choice of cargo tank design is primarily based on economics, i.e., price, delivery schedule and shipyard idle capacity, rather than technical or performance criteria. Both major designs have evolved into a “standard” design with a capacity of 125,000 m3 to 175,000 m3 and a service speed of 18 to 20 knots. Typical dimensions are 270 to 290 metres (m) long and 40 to 49 m in width with a draft of about 11.5 m. Some new ships exceed 300 m in length and have a cargo capacity of up to about 267,000 m3.

Is LNG transported by road?

LNG is transported by road to consumers from import terminals and liquefaction facilities, including peak-shaving facilities, in specially designed LNG road tankers in some countries, including Australia, Belgium, China, Germany, Japan, Korea, Portugal, Spain, Turkey, the UK and the US. These LNG road tankers are double-skinned with insulation in between and contain up to 20 tonnes of LNG.

Transportation via trucks allows the distribution of energy to areas which are far from established gas distribution networks, e.g., areas which do not have pipeline access because of poor economics or difficult terrain. For example, parts of Scotland are supplied by LNG road tankers because the mountains prevent the cost effective laying of pipelines. A growing market is based on the use of LNG as fuel for trucks and large commercial vehicles. A fuel station infrastructure for these vehicles is growing rapidly and is supplied by LNG road tankers.

Economies of scale exist in the liquefaction process. In some areas it is economical to use LNG import facilities as a central “hub”. Supplying multiple end-users via trucks has proven beneficial to all members of the energy supply chain.

What are the hazards of LNG?

LNG is stored and transported at cryogenic or extremely low temperatures (-162°C; -259°F) which can cause cold injuries upon contact with live tissue. The cryogenic temperatures also can cause brittle fracture when in contact with many materials, e.g., rubber or steel. In a confined space, displacement of air by natural gas (vaporised LNG) can result in there being insufficient oxygen to support life.

LNG (natural gas in liquid form) is primarily used as a fuel; therefore the vapours are flammable and will burn once mixed with the proper amount of air to support combustion. LNG in its liquid state will not burn. Vapours form when LNG goes from a liquid to a gas. In all normal circumstances, LNG warms and begins to boil (and evaporate) as soon as it is released outside its storage container. Therefore, LNG facilities and equipment are designed with special features to assure containment of the LNG and its vapours. When natural gas vapours burn, the fires are very hot; the radiant heat of LNG fires is considered the primary hazard.

How does LNG compare in terms of safety hazards to other substances handled in ports, land-based facilities, on roadways and on railways?

LNG is not explosive in open air, toxic, carcinogenic or chemically reactive. It is flammable and will burn – which is its value as an energy source. If a leak or spill occurs, LNG vapours immediately begin absorbing heat from ambient air and soil, become lighter than air, rise and dissipate. If the vapours ignite, the flame speed of flammable vapours burning a cloud in the open air is relatively slow (about 4 metres per second).

Gasoline and fuel oil are more flammable and, in their liquid state and contain toxic components. If these hydrocarbons are spilled, unlike LNG, there will be an environmental impact. The extent and duration depend upon incident-specific conditions. LNG has comparatively fewer hazardous characteristics than some other common fuels.

Will LNG burn?

LNG, which is a liquid, does not burn, because liquids do not contain enough oxygen to support combustion. However, LNG vapours are flammable in air, but only when they comprise between 5-15% of the air. If the fuel concentration is lower than 5% it cannot burn because of insufficient fuel. If the fuel concentration is higher than 15% it cannot burn because there is too much fuel relative to the oxygen. Therefore, the fire hazard of LNG is preconditioned on a combination of variables: the LNG being released, vaporising, then mixing with air in a very narrow gas to air ratio of 5-15%, and ultimately finding an ignition source.

What safety codes and regulations govern the transport and handling of LNG?

Specific standards for terminals and ships have been developed and adopted in different parts of the world. For additional information on the regulations, codes and standards which apply to LNG ships, please refer to Information Paper No. 3. For additional information on the regulations, codes and industry standards which apply to LNG import terminals please refer to Information Paper No. 4.

In the US, the codes and regulations specific to LNG import facilities include:
– 49 CFR Part 193 – Liquefied Natural Gas Facilities: Federal Safety Standards;
– NFPA 59A – Standard for the Production, Storage, and Handling of Liquefied Natural Gas (LNG);
– 33 CFR Part 127 – Waterfront Facilities Handling Liquefied Natural Gas and Liquefied Hazardous Gas.

In Europe, the codes and regulations specific to LNG import facilities include:
– European Union (EU) Seveso II Council Directive 96/82/EC of 9 December 1996 – Control of Major-Accident Hazards involving Dangerous Substances;
– European Standard EN 1473 – Installation and Equipment for Liquefied Natural Gas – Design of Onshore Installations;
– EN 1532 Installation and Equipment for Liquefied natural gas – Ship to Shore Interface.

The following US standards may also be applied:
– NFPA 59A – Standard for the Production, Storage, and Handling of Liquefied Natural Gas (LNG);
– 33 CFR Part 127 – Waterfront Facilities Handling Liquefied Natural Gas and Liquefied Hazardous Gas.

The codes and regulations which apply internationally to LNG ships include:
– International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (the “IGC Code”);
– 46 CFR Parts 153, 154 and 157.

Various LNG operations are governed by different regulatory jurisdictions but all are covered by both regulations and codes. For example, in the US, a prime regulation governing the marine portion of an LNG import terminal is 33 CFR Part 127, Waterfront Facilities Handling Liquefied Natural Gas and Liquefied Hazardous Gas.

For marine operations, port authorities also have jurisdiction.

In the EU, the onshore terminals are under the jurisdiction of European Council. The main European regulation applicable to LNG import terminals and storage facilities is European Union Seveso II Council Directive 96/82/EC of 9 December 1996 on the Control of Major-accident Hazards involving Dangerous Substances.

Applying their own regulations derived from this Directive, national authorities of each European country have responsibility to issue a certificate to the facility and are the lead agency for review of environmental and safety concerns including public comment meetings and review procedures.

In Asia, specific standards have been developed for each area. The codes and regulations specific to LNG import facilities include:
– Gas Industry law, and
– Electricity Power Industry law.

What measures are in place to assure the security of LNG ships and terminals?

Following the attacks on the US on September 11, 2001, the International Maritime Organisation (IMO) implemented a comprehensive security regime for international shipping which entered into force on July 1, 2004. The mandatory security measures, adopted in December 2002, include a number of amendments to the 1974 Safety of Life at Sea Convention (SOLAS), the most far-reaching of which implements the new International Ship and Port Facility Security Code (ISPS Code), which covers the whole port including any LNG facility therein. The ISPS Code contains detailed security-related requirements for Governments, port authorities and shipping companies in a mandatory section (Part A), together with a series of guidelines about how to meet these requirements in a second, non-mandatory section (Part B).

In addition to addressing security threats from terrorism, IMO is implementing an anti-piracy project, a long-term project which began in 1998. IMO’s aim has been to foster the development of regional agreements on the implementation of counter piracy measures. The Regional Cooperation Agreement on Combating Piracy and Armed Robbery against ships in Asia (RECAAP), which was concluded in November, 2004 by 16 countries in Asia, includes the RECAAP Information Sharing Centre (ISC) for facilitating the sharing of piracy-related information. In January, 2009, an important regional agreement was adopted in Djibouti by States in the region, at a high-level meeting convened by IMO. The Code of Conduct concerning the Repression of Piracy and Armed Robbery against Ships in the Western Indian Ocean and the Gulf of Aden recognizes the extent of the problem of piracy and armed robbery against ships in the region and, in it, the signatories declare their intention to co-operate to the fullest possible extent, and in a manner consistent with international law, in the repression of piracy and armed robbery against ships.

Assuring the security of maritime and other critical infrastructure assets has been addressed in country-specific laws and regional agreements. For example, the US passed the Maritime Transportation Security Act (MTSA) in 2002. MTSA applies to vessels operating in U.S. waters (regardless of flag), marine terminals and, in addition to US domestic ports, foreign ports that receive vessels intending to travel to US port facilities. MTSA is similar to the ISPS, except that all parts of MTSA are mandatory. Security vulnerability assessments and security plans are required to be reviewed and approved by the US Coast Guard. The MTSA also introduces the requirement for a USCG-issued Transportation Worker Identification Card (TWIC) for anyone having to enter a secure area of a marine terminal and vessels while in US waters. This includes members of the crew and is required regardless of flag of ship or nationality of the crew.

LNG terminals include a range of layered and multiply-redundant security measures and systems. The specific measures and systems are selected from a wide range of possibilities by risk assessment, usually in conjunction with government security organisations and are deployed according to national alertness criteria.

Have there ever been any major LNG accidents at import terminals worldwide?

The only incident at an import terminal which can be considered major was in 1979 at Cove Point, Maryland, US. An explosion occurred in an electrical switch room. LNG leaked through the electrical gland of an LNG pump, and travelled through 60 m of electrical duct and entered an electric substation. Since natural gas was not supposed to be in this part of the facility, there were no gas detectors. An electrical arc ignited the mixture of natural gas and air, causing a confined explosion of natural gas. One operator was killed and another one seriously injured.

Incidents involving other kinds of LNG facilities have happened, and they must neither be forgotten nor ignored. (NOTE: A Chronological Summary of Incidents Involving Land-Based LNG Facilities is presented in the CH-IV report, 2006). For instance, at the peak-shaving plant in Cleveland, Ohio, US, in 1944, many people died, as the result of LNG’s worst accident. However, it occurred more than 60 years ago, at the beginning of the industrial application of LNG and long before the introduction of the stringent LNG safety standards which exist today. Moreover, it is the only incident involving public safety issues (meaning either public injuries or damage to businesses external to the LNG site). Indeed, since then, there have been no fatalities or injuries to the public due to incidents in LNG terminals.

Additionally, there have been few incidents involving LNG, as the industry has been making huge efforts in this regard and has developed a very conservative approach to the safe design, construction, and operation of LNG facilities. The industry continues to improve its record of reliability and safety. Like many industries involving complex infrastructures and intricate industrial processes, the LNG industry (LNG export and import terminals, LNG peak-shaving plants and transportation systems) has the potential for hazards to occur. The LNG industry has learned from past incidents, and it continues to improve technology, thanks to the benefits of the experience acquired from the handling of the same product over several decades.

The changes which have been made are the expression of these efforts: the incidents which occurred led to significant changes, not only in codes, standards, and safety rules, but also in staff training, storage tank design and construction, plant and equipment technologies, and many other fields. As a result, the study of safety performance indicators highlights the LNG industry’s admirable safety record when compared to that of the overall Oil and Gas industry.

How is LNG ultimately beneficial to citizens around the world?

LNG supplements the natural gas supply, which is a key component of the energy mix. In the World, LNG is 5.3 % of consumed gas (in Europe LNG is 7.3% of consumed gas; in the US LNG is about 2.5% of consumed gas; in Japan, Korea and Taiwan LNG imports comprise more than 90% of their consumption of gas). Natural gas is used in residential homes for cooking, to provide heat and hot water, and in industry. The unique properties of LNG provide compelling reasons for its use in some circumstances. The ability to store LNG (mainly for short term or seasonal use) enables energy companies to meet fluctuations in demand, be it from day to night or from summer to the coldest day in the winter. In the long term, many countries need to diversify their gas supply and LNG imports are part of the answer.

Some countries may have gas reserves or pipeline supplies, but there are several additional factors that result in the need for LNG importation. Some of these factors are economic and some are strategic. Gas reserves are large but not infinite. The portion of the total natural gas supply that can be derived from imported LNG must be evaluated by area, pipeline transportation cost and capacity and load fluctuations. However, the demand for natural gas is increasing primarily because many new power plants are fuelled by natural gas for environmental reasons and the high purity of LNG can be an additional advantage. Worldwide, it is expected that the portion of energy supply from LNG will increase with time.

For example, the European natural gas market is expected to grow from 23% to 28% of total energy consumption in 2020 (i.e., within the next 10 years). In order to meet that growing demand, LNG must play an increasingly larger role in the Europe’s energy mix.

In the US, natural gas is used in residential homes for cooking, to provide heat and hot water. In order to meet growing demand, LNG must play an increasingly larger role in the country’s energy mix. Currently, only a very small percentage of the overall natural gas supply is served by LNG (about 2.5% in year 2007). New England, in the coldest weather, has derived as much as 40% of their natural gas use from LNG. It is expected that the portion of US energy supply from LNG will also increase in the future.

Although new natural gas reserves will be used in the future, the costs to deliver to market will be greater, as will the costs of deepwater production from the North Sea, the Gulf of Mexico and from other places in the world. In contrast, LNG project costs are stable and the number of sources is increasing. Thus, the portions of supplies from LNG will be primarily dictated by the cost of production and transmission of domestic natural gas, as well as the cost of natural gas from the areas which produce and export LNG.

The natural gas prices are sensitive to imbalances, even small ones, in supply and demand. Along with various natural gas imports by pipeline, diversification of sources through LNG imports will work toward a more stable balance and offset the upward price pressure during periods of tight supply.