From gas field to gas market
Natural gas is cooled to roughly -162°C at a liquefaction terminal, reducing its volume by around 600 times and allowing it to be carried as a liquid in insulated carrier tanks rather than requiring a pipeline. At the destination, a regasification terminal warms the LNG back into gas for entry into the local pipeline network.
This liquefaction-shipping-regasification chain is what makes LNG a genuinely global, seaborne commodity rather than one confined to pipeline-connected regions, and it is the reason LNG shipping demand has grown as new export capacity has come online.
Major export and import regions
| Category | Principal regions |
|---|---|
| Major exporters | United States, Qatar, Australia, and a growing list of other producers |
| Major importers | Japan, China, South Korea, and an expanding base of importers across Europe and South and Southeast Asia |
US LNG export capacity has expanded rapidly, and much of that volume trades with more commercial flexibility than the traditional long-term, destination-fixed contracts that historically defined the industry — a shift that has directly supported growth in the LNG spot and short-term charter market.
What moves LNG freight
LNG freight, where it trades outside long-term charter arrangements, is driven by regional gas price differentials (arbitrage between, for instance, Asian and European gas hub prices pulls cargo toward the higher-priced market), seasonal heating and cooling demand, and the balance of newbuilding carrier deliveries against trade growth.
Frequently asked questions
Why does LNG need to be shipped rather than piped?
Pipelines connect only regions with direct physical infrastructure between them. Liquefying gas allows it to be carried by sea to any market with a regasification terminal, which is what makes LNG a genuinely global commodity rather than one limited to pipeline-connected regions.
How much does gas shrink when liquefied?
Liquefaction reduces natural gas to roughly 1/600th of its gaseous volume, which is what makes seaborne transport of meaningful quantities practical in the first place.
Why has US LNG changed the shipping market?
US export capacity has grown rapidly and much of that volume trades with greater commercial flexibility than traditional long-term, destination-fixed LNG contracts, which has directly supported the development of a genuine LNG spot and short-term charter market.