The consumption of natural gas in the world increased by about 70% from 2000 to 2022. Surging demand was driven by overall economic growth, the shift from coal to gas in electricity generation, and increased production. One of the biggest increases in production came in the form of gas produced by hydraulic fracturing (“fracking”) in the United States.

Major supply sources often are located far from demand centers. When pipelines are not feasible, natural gas is cooled to a liquid state (liquefied), at about -164° Centigrade (-260° Fahrenheit), for shipping and storage. The volume of the resulting liquefied natural gas (LNG) is about 600 times smaller than its volume in its gaseous state. The higher energy density makes it economically feasible to ship LNG long distances in special tankers.

In 1959, the world’s first LNG carrier, the Methane Pioneer, set sail from Lake Charles, Louisiana with cargo destined for Canvey Island, United Kingdom.¹ The first purpose-built LNG vessel, the Methane Princess, delivered the world’s first commercial LNG cargo from the Port of Arzew in Algeria to Canvey Island in 1964.

The global LNG industry expanded very slowly through the 1990s, but beginning in the 2000s LNG underwent seismic changes. LNG trade increased nearly fourfold from 2000 to 2021 due to surging demand for gas, reduced cost of building LNG infrastructure, and abundant supplies of gas. By 2020 there were 42 buying countries and 20 selling countries. This profoundly changed the dynamics of trade in terms of volume, geographical areas, and business models.²

The top five LNG exporting nations (Australia, Qatar, United States, Russia, and Malaysia) have abundant natural gas resources. The top five LNG importing nations (China, Japan, South Korea, India, Taiwan) have modest natural gas resources but large demand for heating and electricity generation. This creates a strong pattern in global LNG trade.

However, the LNG market is very sensitive to global and regional geopolitical, economic, and environmental forces. Russia’s invasion of Ukraine shocked global LNG markets, causing Europe to buy record amounts of LNG and driving prices up to record levels. Major consuming nations such as Japan and South Korea have shifted to nuclear, wind, and solar energy to meet energy security and decarbonization goals.³

Before Russia’s invasion of Ukraine, the European gas market was tied to the pipelines that delivered Russian gas. But Europe’s appetite for gas can increasingly be met by LNG imported from the United States, Qatar, and other sources. The rapid expansion of LNG import capacity in Europe in response to the war has raised concerns that in the not-too-distant future capacity will be a problem, not a shortfall. All of this has led some analysts to proclaim that “gas is the new oil,” meaning that gas is now a macroeconomic and geopolitical asset that is impacted by wars, monetary policies, overall health of the economy.⁴

LNG is problematic from a climate perspective. A power plant burning natural gas derived from LNG has lower greenhouse gas emissions compared to a coal-fired power plant. However, the climate benefit is smaller than commonly assumed due to the methane leakages across the NGL supply chain, including transportation.⁵ Electricity from LNG has significantly higher emissions than low-carbon sources such as wind, solar, and nuclear power. LNG infrastructure is long-lived and creates an incentive to continue extracting fossil methane for decades to come, a clear contradiction of sound climate policy.

In the United States, the LNG industry is plagued by environmental injustices. For example, the Sabine Pass (Louisiana) and Freeport and Corpus Christi (Texas) LNG facilities are located in communities that are overburdened and underserved from energy, climate, environmental, and economic justice perspectives. These communities are low-income, have high percentages of black and brown households, and share a legacy of industrial activity that generated mountains of toxic and hazardous waste.⁶ Additional proposed LNG projects in Texas and Louisiana would be sited in similar communities.

1 U.S. Department of Energy and United States Energy Association, “Global LNG Fundamentals,” 2017, Link

2 Enerdata, The rise of LNG, October 1, 2020, https://www.enerdata.net/publications/executive-briefing/lng-rise.html

3 Institute for Energy Economics and Financial Analysis, “Global LNG Outlook 2023-27,” February 2023, https://ieefa.org/media/3619/download?attachment

4 Savcenko, Kira, “How the Russia-Ukraine war is turning natural gas into the ‘new oil’,” S&P Global Commodity Insights, April 12, 2023, https://www.spglobal.com/commodityinsights/en/market-insights/blogs/natural-gas/041223-how-the-russia-ukraine-war-is-turning-natural-gas-into-the-new-oil

5 Transport and Environment, “Methane escaping from ’green’ gas-powered ships fuelling climate crisis – Investigation,” April 13, 2022, Link

6 U.S. Council on Environmental Quality, “Climate and Economic Justice Screening Tool,” Accessed June 10, 2023, https://screeningtool.geoplatform.gov/en/