LNG—an introduction
Produced in partnership with Andrews Kurth Kenyon
LNG—an introduction

The following Energy practice note produced in partnership with Andrews Kurth Kenyon provides comprehensive and up to date legal information covering:

  • LNG—an introduction
  • What is LNG
  • The LNG industry
  • The LNG value chain
  • Upstream
  • Liquefaction
  • LNG sales and transportation
  • LNG import and regasification
  • Distribution
  • LNG in the United Kingdom

What is LNG

Liquefied natural gas (LNG) is a hydrocarbon, predominantly consisting of methane gas, which has been cooled to approximately -162°C, changing it from a gas into a liquid. The process of cooling and converting the gas into a liquid form is known as liquefaction. The liquefaction process reduces the volume of the gas to 1/600th of its original volume, allowing transportation and storage of greater volumes. On arrival at a destination, the LNG is regasified (essentially, re-heated) and converted back into natural gas for further distribution in its original gaseous state.

LNG is odourless, non-toxic and non-corrosive, making it a safe hydrocarbon to transport. As LNG is insoluble, if an LNG carrier experienced a spill, the LNG would evaporate rather than pollute the water. LNG is not stored or transported under high pressure and is therefore not explosive.

LNG is generally measured by weight (usually million metric tonnes or ‘MT’). In the sale of LNG, the in-ship volume is typically measured by cargo volume (in thousands of cubic metres or cubic feet).

LNG is not new technology, with the first commercial LNG facility built in the United States in the 1940s as a peak load shaving facility. Since then, advances in technology and reduced costs in all components of the LNG value chain have seen LNG emerge as a cost-competitive clean fuel with an industry of

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