What is the Fastest Growing Fossil Fuel?
Jul 16 2018 Read 584 Times
With experts forecasting oil demand could peak by as early as 2036, a new resource is set to take over. Made up of methane and ethane, liquified natural gas, also known as LNG, is now the fastest growing fossil fuel on the planet. The latest shipping data from Thomson Reuters Eikon reveals Japan is the biggest guzzler of LNG, importing a huge 83.5 million tonnes a year. China recently surpassed South Korea to claim second place, with LNG imports increasing by more than 50 percent in 2017 to hit 38 million tonnes.
Trade tensions put LNG growth at risk
It may be the world's fastest growing fossil fuel, but that doesn't mean the outlook is peachy for LNG. Analysts are warning that escalating trade tensions between the USA and China could see the global LNG market, which is currently worth an estimated US$300 billion, take a serious hit.
Following talks with China, Trump has made it clear that America is aiming to be as the world’s largest exporter of liquefied natural gas, a goal that could shake up the current state of the LNG market. Meanwhile, Germany recently derailed a potential pipeline project in Russia while the EU is accusing Qatar, the world's biggest LNG seller, of engaging in anti-competitive practices. Combined, these three factors could pose a serious threat to the global success of the LNG market.
Problem solving to stabilise the market
Other experts are more optimistic, maintaining that while rising trade tensions and geopolitical strain could disrupt the global LNG market they're unlikely to derail overall growth. For example, if China was to levy tariffs against American LNG, traders could simply re-route cargoes to South Korea and Japan, then sell off Australian-sourced LNG to the Chinese market. Similarly, a decline in Qatari LNG would initially disrupt shipments to Europe, though these could quickly be replaced by Nigerian or Angolan LNG.
“Even at the height of Soviet tensions or the worst days of the Ukraine crisis, they continued to export gas to the West,” comments Wood Mackenzie analyst Nicholas Browne. “When it’s in the economic interest of both parties, trade will continue.”
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