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The Future of Natural Gas in the World of Energy


The Future of Natural Gas in the World of Energy

Over the last two decades, natural gas has gradually and consistently etched its place as a critical player in the global energy supply chain. As natural gas gains prominence, the demand for other fossil fuels has either stagnated or declined. The use of coal, for example, has declined consistently over the last 3 decades. Within the same timeframe, the demand for natural gas has grown slowly but steadily. That’s impressive considering the volatility of the energy market over the recent past. But now that the energy sector is trying to abandon fossil fuels in favor of cleaner, renewable energy sources such as solar and wind, what’s the future of natural gas? 

Natural Gas as the Bridge Fuel to a Sustainable Future

The goal is to replace coal and other harmful fossil fuels with renewable energy sources. However, the energy sector is yet to build the necessary wind, solar, and hydropower infrastructure for a stable renewable energy supply. There has to be a transition fuel to cover the deficiencies of renewable energy. Natural gas stands out as the most reliable transition fuel; it will for the next couple of decades help the world edge closer to the goals of the Paris Agreement.

However, transporting natural gas is a huge logistical challenge because gas can only be distributed by pipelines. But natural gas fields are scattered all over the world, most of them being far away from the towns where the end users live. To make it easier to transport by road and sea, and to store it safely, natural gas is liquefied at -162°C to turn it into liquid (liquefied natural gas or NLG). It is then re-gasified and piped to the end user via pipelines.

LNG is a cleaner alternative to coal and oil because, when burning, it emits the least conventional air pollutants among all fossil fuels. Its carbon and sulfur dioxide emissions, as well as dust and other particulates, are significantly fewer than burning coal or oil. Its combustion technology is also far more advanced than the best available coal technology.

Critics of LNG raise concerns about its high methane content, which is between 85%-95%. However, LNG companies around the world have proved their ability to police methane leaks even without regulatory pressure. Most of these companies have invested heavily in leak detection technologies that track and report leakages for speedy interventions.

UNEP’s Emissions Gap Report calls for a rapid transformation of the energy sector in order to contain a full-blown climate crisis. This will be possible by 2030 with LNG as a transition fuel. LNG can be used for electricity production, as a fuel for trucks, and for household heating.

What’s the Future of LNG in a Renewable Future?

Even when solar and other renewable energy sources will be sufficient to satisfy the global energy market, countries will still have to invest in natural gas. This is because transitioning to wind and solar cannot replace fossil fuels in aviation and marine shipping. Industrial sectors, e.g. iron smelting, will still be dependent on fossil fuels many decades from now. If fossil fuels cannot be fully replaced by renewable energy, then LNG has to be the fossil fuel that the world has to fall back to. It’s cleaner and more reliable, after all.

Notable Projects Shaping the Future of LNG

The LNG industry has shown resilience in the face of criticism by doubters and 2 years of pandemic-driven disruptions. The sector is still strong and the demand for LNG is on an upward trajectory. Investors in the sector are investing millions of dollars into modernizing LNG facilities in anticipation of a future LNG boom.

Atlantic, Gulf & Pacific International Holdings (AG&P) is making huge strides in India’s LNG market. The downstream LNG development company has been a huge revelation in the Asian energy sector over the last decade. The company is now partnering with the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development to invest up to $120 million in new LNG projects in India. The Singapore-based company, under the brand name AG&P Pratham, is on a mission to revolutionize India’s city gas distribution network. The focus of CEO Joseph Sigelman is to create an uninterrupted supply of LNG, compressed natural gas (CNG), and piped natural gas (PNG) for Indian industries and households.

North Field Expansion Project in Qatar is another LNG project for the future. The existing infrastructure produces 77 million TPY (throughput yield) of LNG, with the expansion set to increase production to 110 million TPY by 2025. Consequently, Qatar will become the largest LNG exporter globally and a leader in Asia’s green energy transition. In Africa, Mozambique LNG is investing in offshore LNG projects in Mauritania and Senegal that will play a critical role in West Africa’s transition to a sustainable energy future. Lastly in Croatia, Hrvatska LNG recently launched the Krk Island LNG Terminal that’s touted to spearhead the energy transition in southeastern Europe. The new facility has an estimated storage capacity of 2 million TPY. 

Final word

The future of LNG is bright. With the power of incumbency as a long-serving fuel in many countries, LNG will give renewable energy sources a run for their money for a long time. Besides, LNG delivers environmental benefits that can aid the world in its pathway to a lower-carbon future. 


LNG supply chain

Qatar’s Strategies Towards Building a Sustainable and Resilient LNG Supply Chain

According to Exxon Mobil’s Outlook for Energy (2017), the global market for natural gas (NG) should expand by around 45% over the next 20 years with demand for liquefied natural gas (LNG) expected to grow by more than 2.5 times within the same period. Acknowledged as a low carbon-intensive fossil fuel, natural gas is a cleaner, environmentally-friendly, and sustainable option for energy transition that reduces the use of high carbon-intensive fossil fuels, such as coal and crude-oil distillates. Natural gas is also ideal for increasing energy efficiency on the basis that energy release per mass during NG combustion is the highest amongst fuels (fossil- and biomass-based). Moreover, the amount of energy produced from renewables cannot supply global demands for a complete replacement of fossil fuels.

Accordingly, the LNG market is becoming highly competitive with more than 20 countries already supplying customers around the world. Major suppliers currently include Qatar, Australia, Malaysia, Russia, United States, Nigeria, Indonesia, Algeria, Egypt, to name but a few. Increased capital expenditure in the sector is coming and new LNG players are expected to enter the market in the years ahead. These include countries around the Eastern Mediterranean; the United States Geological Survey (U.S. Geological Survey Fact Sheet 2010 – 2014) estimates that the Levant Basin (involving Cyprus, Egypt, Israel, Lebanon, Palestine, and Turkey) contains 122.4 trillion cubic feet of technically recoverable gas.

In such a competitive environment, Qatar managed to maintain its position as the largest LNG exporter in the world (at 77.8mn tons) in 2019 (2020 World LNG Report), and is massively investing to preserve its role as the main global player. Qatar’s future strategies not only include the expansion of production capabilities by around 64% by 2027 to reach 126 million tons of LNG per annum (The Peninsula Qatar, 2019), but also its shipping capabilities through investment in a new fleet of LNG carriers. For instance, on June 1 this year, Qatar Petroleum announced the signing of the largest LNG shipbuilding agreement in history to secure more than 100 ships valued in excess of QR 70 billion to cater for its LNG growth plans (The Peninsula Qatar, 2020). Additionally, Nakilat, the shipping arm of Qatar’s LNG, will significantly increase its current 15% share of the global LNG fleet carrying capacity and will remain the largest owner of LNG carriers in the world for the coming decades.

This strategic investment will propel Qatar from being the world’s largest LNG exporter and producer to a globally-recognized champion of LNG supply chains. As things stand, an LNG supply chain commonly consists of three main links: exploration and production; treatment and liquefaction; and shipping and distribution. Expanding shipping capabilities will definitely strengthen the third link of Qatar’s LNG supply chain, whereas the first two links are already very well established.

By owning and controlling the whole LNG supply chain, Qatar has acquired a significant competitive advantage and moved further ahead of the competition in the LNG market. For instance, by owning independent shipping capabilities on top of well-established production and liquefaction facilities, Qatar will be better prepared and ready to respond to future unexpected risk events. Crucially, the country will also be able to recover quickly from any potential disruptions.

Accordingly, Qatar is building one of the most effective and resilient LNG supply chains in the world. The resilience of the country’s LNG supply chains will also increase international buyers’ trust and confidence in Qatar as a reliable LNG exporter. This reputation will in turn consolidate Qatar’s actual portfolio and help earn new market share. Being seen as a reliable supplier is extremely important in a business environment driven by oil-indexed long-term contracts of 15-25 years. Moreover, being the largest owner of LNG carriers in the world will provide Qatar with a huge competitive advantage in the spot and short-term markets. For instance, the LNG market was traditionally dominated by long-term contracts covering 20-25 years. However, thanks to the emergence of new suppliers and consumers, spot market purchases of LNG have also become a common practice. Indeed, spot and short-term LNG trades made up 32 percent of overall import volumes in 2018 (EnergyWorld, 2019) and are expected to rise over the coming years.

To sum up, by expanding its LNG shipping capabilities on top of its well-established production and liquefaction facilities, Qatar is building a holistic, efficient and resilient LNG supply chain. This will provide the country with a unique and significant competitive advantage in a highly competitive LNG business landscape.


Dr. Adel Elomri and Dr. Brenno Menezes are Assistant Professors at the College of Science and Engineering, Hamad Bin Khalifa University.


This article is submitted on behalf of the author by the HBKU Communications Directorate. The views expressed are the author’s own and do not necessarily reflect the University’s official stance.