As the world witnesses record-breaking liquefied natural gas trade, let's explore the LNG market, including its key exporters and importers, the cost to liquefy natural gas and LNG purchase and sale agreement in Vietnam.
1. About liquefied natural gas (LNG)
Liquefied natural gas (LNG) primarily consists of methane, making up approximately 95% of its composition. The production of this fuel involves cooling natural gas to an extremely low temperature of around -162oC. Thanks to its environmentally friendly characteristics, LNG has gained significant recognition and is being used in various countries.
Liquefied natural gas is an odorless and colorless liquid that has the advantage of being lighter than air, allowing for easy dispersal and making it a safer option for storage and transportation. In the event of an accidental leak, LNG quickly dissipates without leaving any residue behind, thereby reducing the risk of harm. Additionally, LNG has a high auto-ignition temperature range of 482 to 632oC, which further minimizes the chances of combustion and explosion.
When LNG is burned, it reaches a flame temperature of approximately 1880oC. Unlike gasoline and oil, LNG burns completely without leaving any residue. This characteristic enhances the safety of machinery and equipment, as it reduces the need for maintenance and minimizes wear and tear, ultimately extending their lifespan.
One of the key advantages of LNG is its significantly greater capacity compared to compressed natural gas (CNG) once liquefied. Under typical conditions of 1 atm and 15oC, LNG only occupies about 1/600th of the total volume of natural gas. This makes LNG a highly efficient and space-saving option compared to other natural gas products.
Liquefied natural gas - LNG
2. How much does it cost to liquefy natural gas?
LNG projects in the Middle East can be as inexpensive as less than $0.5/mmBTU per unit, while higher upstream expenses are seen in the United States, Australia, and Mozambique at $3–5/mmBTU. On a global scale, the unit costs to liquefy natural gas generally range from $2–4/mmBTU.
These costs can vary depending on various factors, including the scale of the liquefaction facility, the technology used, and energy prices. Large-scale liquefaction plants, often used for exporting liquefied natural gas (LNG), can cost billions of dollars to construct. The costs include:
- Liquefaction Equipment: Cryogenic equipment, heat exchangers, and other specialized machinery are required for the liquefaction process.
- Storage Tanks: Insulated storage tanks are necessary to store the liquefied natural gas before it is loaded onto LNG carriers.
- Utilities and Infrastructure: Infrastructure for power supply, water, and other utilities contribute to the overall cost.
- Labor and Construction: Skilled labor, construction costs, and project management expenses are significant contributors.
- Regasification Facilities (for Import Terminals): Import terminals also require regasification facilities, adding to the overall investment.
Additionally, the ultimate price of LNG when it reaches its destination will mostly rely on the length of the logistical chain. The primary factors that affect this include the cost of sourcing the LNG, the distance between the LNG liquefaction plant and the final destination, the size and route of the LNG carrier, and customers specific natural gas availability needs.
Cost contributors in the LNG logistics chain
3. How to ship liquefied natural gas overseas?
Shipping liquefied natural gas (LNG) overseas involves specialized vessels designed to transport LNG at extremely low temperatures. These vessels are typically approximately 300 meters long, 43 meters wide, and have a draft of approximately 12 meters.
LNG vessels are distinct from other cargo carriers due to their unique characteristics. They are equipped with features such as heavy insulation and temperature-controlled tanks, which enable them to maintain the gas in a liquid state. By utilizing natural gas as fuel for propulsion, LNG carriers generate fewer greenhouse gas emissions and play a critical role in facilitating the international trade of natural gas.
LNG vessels
4. Liquified natural gas exports and imports situation
In a global context, the trade of liquefied natural gas (LNG) reached an all-time high in 2022, reaching an average of 51.7 billion cubic feet per day (Bcf/d), marking a 5% increase from the previous year. As of April 2023, 20 LNG exporting markets were connected with 48 importing markets that had the necessary infrastructure for the liquefied natural gas trade. It was projected that worldwide energy investment, encompassing both clean sources and fossil fuels, would reach an unprecedented 2.8 trillion USD in 2023.
The United States has reached a significant milestone by becoming the world's biggest liquefied natural gas exporter. Recent data shows that in 2023, the US shipped a record-breaking 91.2 million metric tons of LNG, surpassing both Australia and Qatar, which were previously leading suppliers. This achievement was primarily due to the reopening of Freeport LNG in Texas.
Meanwhile, Qatar, the top LNG supplier in 2022, experienced a 1.9% decline in volumes, causing it to drop to third place in terms of LNG shipments. Australia, on the other hand, maintained its position as the second-largest exporter, with exports remaining relatively stable compared to 2022.
Regarding liquefied natural gas imports, Asia is currently the most potential market. Japan has traditionally been one of the largest LNG importers, especially after the Fukushima nuclear disaster, which led to increased reliance on natural gas for power generation. Moreover, China's demand for natural gas, including LNG, has surged as part of its efforts to reduce reliance on coal and improve air quality.
5. LNG purchase and sale agreement in Vietnam
A LNG Purchase and Sale Agreement is a contractual arrangement between a buyer and a seller for the purchase and sale of liquefied natural gas. As LNG is becoming an increasingly important part of Vietnam’s energy strategy, the LNG Purchase and Sale Agreement with other suppliers from the US, Australia, Europe, and the Middle East is very crucial for the country's development, ensuring access to the best quality and price options.
6. Gas South - One of the largest LNG companies in Vietnam
Gas South has emerged as a pioneer in providing eco-friendly fuel solutions across Vietnam. It presents businesses and organizations with an opportunity to cut costs on fuel by providing a dependable and affordable supply of LNG for extended periods.
For more information, customers and partners can get in touch with Gas South:
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Head office: 4th Floor, PetroVietnam Tower, No. 1-5 Le Duan, Ben Nghe Ward, District 1, Ho Chi Minh City.
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Website: https://pgs.com.vn/
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Fanpage: https://www.facebook.com/GasSouthJSC
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Email: lienhe@pgs.com.vn
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Phone: (+84.28) 3910 0108 - 3910 0324
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Fax:(+84.28) 3910 0165 - 3910 0325
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OA Zalo: https://zalo.me/gassouth18006776