The War in Ukraine Boosts LNG Demand/Alters Energy Landscape

The war in Ukraine is having dramatic effects on the world’s energy markets. While Russia remains one of the world’s largest producers of both natural gas and crude oil, and Russia is connected to large, existing pipelines into the EU, that nation is facing multiple sanctions and restrictions on its energy sales due to the war. At the same time, EU nations quickly learned that Russia can restrict the flow of natural gas into EU markets with the flip of a switch or a claim of pipeline maintenance shutdowns. Europe has been scrambling for new, non-Russian energy resources, including a renewed interested in domestic nuclear power generation.

One of the biggest results has been immense new demand for LNG—natural gas that is chilled to extremely low temperatures and then shipped to gas-hungry markets via massive, specialized ships. LNG is a near-perfect way to get relief to European nations that are in critical need of gas supplies, but the supply chain takes time to construct. Demand has skyrocketed, causing LNG prices to climb and creating a rush to increase shipping, production and handling facilities. (At one point, EU natural gas prices had risen six-fold during 2022.) In nations ranging from the U.S. to Qatar to Iran, plans for very intense investment are underway for the development of new LNG capabilities. On the receiving end in the EU, the offloading of LNG requires major investment in regassification plants, where the product is warmed and altered from a liquid state back to gas.

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The War in Ukraine Boosts LNG Demand/Alters Energy Landscape, Business and Industry Trends Analysis

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