Russia accounted for an 8% of the global LNG export market last year, and served 43.9% of its LNG quantities to European buyers, amid the rapid depletion of European gas storage stockpiles during the last winter demand season. With the EU now aiming to stop all Russian energy imports by 2027, that leaves plenty of slack for non-Russian LNG producers.

Speaking at a press event in London, S&P Global’s Vera Blei said the net effect of last year's trends was a reversal in the previous relationship between East Asia’s Japan Korea Marker (JKM) and the Dutch TTF benchmark price for European customers, which are now willing to pay significantly more for LNG.

Utilisation rates at LNG export plants were already up last year, before the war exacerbated the energy crunch. The IGU’s data shows average LNG liquefaction capacity utilisation rose from 74.6% globally in 2020 to 80.4% last year. Qatar, the US and the UAE all managed to export LNG at above 100% utilisation, pushing output beyond their nameplate liquefaction capacities, while Papau New Guinea, Russia, Oman and Australia achieved utilisation of above 90%. Rystad Energy’s John Frederik Muller forecast that utilisation rates would rise further in 2022, as continued European competition for LNG cargoes spills into the winter demand curve for LNG spot markets. 

“We are seeing power producers in European countries limiting exports because resources are very low, lower than they have ever been in some countries,” Muller said. “So it's likely we will see higher LNG utilisation this year compared to last year. There will be increased need for on-boarding LNG.”  

On the regasification side, utilisation rates remained almost unchanged yr/yr, at around 43%. Japan still has the biggest regasification capacity worldwide, though China is rapidly catching up, Muller said.  China overtook Japan to become the world's biggest LNG importer in terms of volume, increasing net purchases from 68.9mn mt/yr in 2020 to 79.3mn mt/yr last year.

Headline figures

Global LNG trade reached an all-time high of 372.3mt in 2021, up 4.5% on 2020, on the heels of a 16.2mn mt/yr annual increase. China, unsurprisingly, was a major contributor having increased its net import LNG volume by 10.4mn mt yr/yr, while Asian volumes across the board climbed from 68.9mn mt/yr in 2020 to 79.3 mn mt/yr in 2021.

Export growth was largely fuelled by the US where liquefaction plants had been churning out impressive levels of output, before Freeport LNG’s unexpected fire incident tempered expectations. LNG shipments from the US rose 22.3mn tons in 2021, up 49.8% on the previous year.  Australia was the largest LNG exporter, having shipped 78.5mn mt in 2021, up marginally on 77.7mn mt the previous year. Growth in LNG exports was also seen in Egypt (up 5.2mn mt, or 391.2%), and Algeria (up 1.2mn mt, or 11.4%)

Some export markets actually delivered fewer LNG cargoes for reasons that might be expected, including technical issues, feed gas disruptions and delays bringing online new projects. Peru, Trinidad and Tobago, Norway and Nigeria all saw LNG exports fall yr/yr in 2021, the IGU said.

LNG investors are now ramping up capacity to handle additional demand.  

The IGU stressed that building up liquefaction capacity both in existing LNG exporting markets, and in developing ecosystems like Africa’s, will play a crucial part to build the resilient and diversified import streams that LNG takers require. Global liquefaction capacity reached 459.9 mn mt/yr at the end of last year.

Over the course of 2021, the IGU tracked FIDs for a total 50mn mt/yr liquefaction capacity, with more than half of the amount stemming from Qatar’s North Field East expansion project, which will add 32mn mt/yr to global liquefaction streams from four new operating trains due to launch fully by 2026. A further 13mn mt/yr was sanctioned across Gazprom’s proposed Baltic LNG T1 and T2 projects, while a second train at Woodside-operated Pluto LNG in Western Australia will add a further 5mn mt/yr.

Emissions

Amid the “worst global energy crisis in memory”, the IGU believes LNG will play a vital role in allowing societies to control harmful emissions – preventing the lamentable return of oil and coal-fired power stations, all while keeping economies turning.

Milton Catelin, secretary general of the IGU, commented: “Even if it is becoming increasingly challenging in the current environment, the world must stay the course of energy transition, and natural gas, together with a growing portfolio of decarbonised, low and zero- carbon gases, will be key to making that possible.

Gas is the fastest attainable and sustainable long-term vehicle to get the world back onto the energy transition path, and the inherent flexibility of LNG allows to deliver it to almost anywhere in the world.”

Global LNG expansions provide further opportunity for the industry to strengthen solutions to the world’s climate change predicament, serving relatively clean-burning gas to support an achievable and sustainable energy transition, the IGU said.

Three Canadian LNG projects – Cedar LNG 1, Kitmat LNG and Woodfibre LNG – will be powered by clean, renewable hydroelectricity, for example, while in the US, Venture Global is building a carbon capture and storage to exhaustively remove emissions from its processing operations. Venture Global estimates 500,000 mt/yr of carbon will be removed thanks to its initiative, which will see CCS developed at two of its Louisiana-based LNG plants: Calcasieu Pass and Plaquemines LNG.

Aside from CCS, the LNG ecosystem is also trying out innovative solutions on select liquefaction production facilities. Hammerfest LNG, for instance, is rolling out an all-electric concept that uses electric motors to churn liquefaction compressors, without the need for oil-based propulsion. The idea has been implemented previously, with electric motors at Freeport LNG currently deployed for similar ends.