Liquefied Natural Gas: How a Regional Fuel Became a Global Commodity
For a long time, natural gas was a fuel that could only be sold close to home. Gas is bulky and difficult to transport. Anyone who wanted to use it depended on a pipeline from a gas field nearby. That gave rise to separate regional markets, each with its own price: in North America, in Europe and in Asia, the same quantity of gas could cost very different amounts at the same moment.
That situation has changed profoundly over the past twenty years. The reason is a technique that has existed for some time but has only recently been applied on a large scale: the liquefaction of natural gas, known internationally by the abbreviation LNG.
Cooling to minus one hundred and sixty degrees
When natural gas is cooled to around minus 162 degrees Celsius, it becomes liquid. Its volume shrinks to roughly one six-hundredth of the original. That allows the gas to be carried across oceans in specialised tankers, just like oil. On arrival it is warmed back into gas at a terminal and distributed through the ordinary pipeline network.
The process is expensive. A plant to liquefy gas costs many billions and takes years to build. Such projects are therefore usually only started once buyers commit for a long period, often for fifteen to twenty years. Those long-term contracts make LNG a sector in which patience and capital matter more than speed.
From regional market to world market
Because gas can now travel by ship, the former regional markets have become increasingly connected. For a long time Qatar and Australia were the largest exporters. Since 2023 the United States has been the world's largest exporter, thanks to the enormous volumes of gas released there by new drilling techniques. In 2025 Canada too shipped its first large cargoes from the west coast, bound for Asia.
The importance of LNG became painfully clear in Europe after 2022. When supplies of Russian pipeline gas largely fell away, the continent had to find other sources within a short space of time. Liquefied natural gas from the United States, Qatar and elsewhere filled a large part of the gap. New floating terminals were brought into service in record time. Without this technology, the energy crisis of those years would have been far more severe.
Opportunities and tensions
The growth of the world market for gas also brings new vulnerabilities. Because gas now travels by sea, conflicts near important straits can disrupt supply, as recent tensions in the Middle East have shown once again. Prices in Europe and Asia can therefore move quickly and sharply. Countries that import gas have become more sensitive to events far beyond their own borders.
The energy transition plays a part as well. Natural gas emits less when burned than coal and oil, and is therefore seen by many countries as a transition fuel. At the same time it remains a fossil fuel, and how long the world will continue to lean on gas is the subject of considerable debate. Growing demand for electricity, not least for data centres, only makes that question more pressing.
A lesson about energy and geography
The rise of liquefied natural gas shows how technology can redraw the economic map of the world. A commodity once tied to a single region has grown into a globally traded good, with all the opportunities and risks that brings. For economies that import virtually all of their energy, spreading across different sources and suppliers remains one of the most important buffers against uncertainty.
Disclaimer. This article is published by Lunar Asset Management N.V. for general informational and educational purposes only. It reflects the personal views of the author at the time of writing and does not constitute investment advice, a recommendation, an offer, or a solicitation to buy or sell any security or financial instrument. References to specific companies are illustrative and should not be interpreted as buy or sell recommendations. Investing involves risk, including the possible loss of principal. Past performance is not a reliable indicator of future results. Readers should consult a qualified financial advisor before making any investment decision based on their personal circumstances. Lunar Asset Management N.V. is supervised by the Centrale Bank van Curaçao en Sint Maarten (CBCS).
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