Liquefied Natural Gas (LNG) is a concept and a physical commodity, defined as natural gas—predominantly methane—that has been cooled to a liquid state for ease of non-pressurized storage and transport. The liquefaction process, which involves cryogenic cooling to approximately -162°C (-260°F), shrinks the volume of the gas by about 600 times. The origin of this concept dates back to the 1910s, with the first recorded experiment in 1917 by scientist William Franklin in the U.S., and the first commercial LNG plant built in West Virginia in the 1940s. The problem it solved was the technical and economic impossibility of transporting voluminous natural gas over long distances, especially across oceans, where pipelines are not feasible.
The mechanism of LNG involves a four-stage process: first, the natural gas is treated to remove impurities like water and carbon dioxide; second, it is cooled in a liquefaction facility until it condenses into a liquid; third, the LNG is transported in specialized, insulated LNG carriers (tankers); and fourth, upon arrival at an import terminal, it is stored and then returned to its gaseous state, or regasified, by warming it up. The regasified natural gas is then injected into the existing pipeline network for distribution to power plants, industrial facilities, and residential customers.
LNG connects directly to the global energy market and concepts like energy security and energy transition, as it allows countries lacking domestic resources, like India, to diversify their energy mix and displace more carbon-intensive fuels like coal. India, which has seven operational LNG terminals, aims to increase the share of gas in its energy mix from 6% in 2020 to 15% by 2030. A recent change in the industry is the growing use of Floating Liquefied Natural Gas (FLNG) technology, which allows for offshore liquefaction and storage, offering a flexible alternative to traditional onshore plants. The market has also seen a shift toward more hub-indexed pricing and away from oil-indexed contracts, reflecting a decoupling of oil and gas prices.