LIBERALISATION OF THE ESTONIAN GAS MARKET
reduced the requirement for the US to import LNG, and has meant that more LNG is available for other regions of the world. The developments in shale gas and other forms of unconventional gas are timely because gas demand in some regions of the world is still growing. According to the IEA, global gas demand is projected to increase at a 1.4% cumulative growth rate between 2008 and 2035. It is not expected to increase significantly in the EU, Japan, and the US, but the majority of demand growth is projected to occur in Brazil, China, and India. In the IEA’s recent ‘Golden Age of Gas Scenario’ – which is a high scenario for gas demand; gas demand from China increases to be the same as the entire EU market demand by 2035, and demand in India quadruples from current levels9.
3.2
Liquefied natural gas
The development of liquefaction technology in the 1960s allowed the storing and transportation of gas in a liquid form. Natural gas is treated in a liquefaction facility to remove water and other components that would freeze to solids, and is then cooled to 162oC. Liquefaction reduces the volume of the gas by around 600 times. LNG is then loaded onto ships with special storage tanks, which allow storage of LNG in liquid form over a period of time, and delivered to regasification terminals, turned into a gaseous form and distributed to end customers, see Figure 14. Figure 14 – LNG value chain
It should be noted that LNG is not the same as gas supplied through bottles or tanks for use in cooking and heating systems. Such gas is referred to as “liquefied petroleum gas” (‘LPG’) which is typically a mixture of propane (C3H8) and butane (C4H10), whereas natural gas is mostly methane (CH4). LNG is a convenient way of transporting geographically remote reserves to the main consuming markets, and is more economically viable as a transportation method over long distances than pipelines. The break-even point is quoted at between 3,000km and 4,000km, depending on the type of geography to be traversed. LNG volume is typically reported in cubic metres on regasified basis and in tonnes on a liquid gas basis, see Annex D. 1bcm of regasified LNG equals around 1,300,000 tonnes of liquid gas. 3.2.1
LNG supply
Figure 15 shows the growth of LNG supply by country since its inception in 1964. Qatar, which started producing LNG at the end of 1996, is now the world’s largest producer with expected production of regasified output of 102bcm/a by 2012-2013. Through its link with
9
‘Are we entering a golden age of gas?’, IEA, 2011
PÖYRY MANAGEMENT CONSULTING
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