Global Gas Markets : The Role of LNG in the Golden Age of Gas and the Globalization of LNG Trade

As the world enters the second decade of the 21st century, policy makers around the globe continue to grapple with issues related to energy security, energy affordability, and an expected increase in demand for all energy sources. At the same time, concerns about global climate change and reducing greenhouse gas emissions remain in focus as the world struggles to define the path to a sustainable energy future. As an abundant, affordable, and clean-burning fuel, many countries around the world are increasingly looking towards natural gas to play a key role in powering the future. The prospects for natural gas are so promising that the International Energy Agency (IEA) has suggested that the 21st century could be the “Golden Age of Gas” with demand for natural gas projected to increase by more than fifty percent from the 2010 levels and “account for over [twenty-five percent] of world energy demand in 2035.” Along with the increased demand for natural gas comes a corresponding increase in international trade in natural gas, with most of the increased trade expected to be in the form of liquefied natural gas (LNG). LNG is natural gas that has been cooled to approximately -161°C, at which point it condenses to a liquid that can then be shipped via LNG tanker anywhere in the world. Since many natural gas reserves are located away from key demand markets, LNG offers an important solution for the global gas markets in terms of moving natural gas to markets where it is most needed. Through the lens of the IEA’s Golden Age of Gas Report, this Article explores the growing role of LNG as the “glue” linking global gas markets and identifies a number of developments in global gas markets giving rise to new opportunities and challenges for LNG in the coming decades