Understand the world gas market from production to consumption

In third place was South Korea, which imported 45.4 million tons of LNG.

Compared to the Asian market, the largest LNG import market is the European market. Last year, Europe imported 77.7 million tons of LNG, down 5 percent from the 81.9 million tons imported in 2020.

Europe will meet its LNG needs in 2021 mainly through five countries: the United States with 31%, Qatar with 21%, Russia with 18%, Algeria with 13%, and Nigeria with 11%.

World gas market prices

There are two markets in the price of oil and gas, one is the long-term market, which usually enjoys lower prices and guarantees the continuation of safe flows, and the second market is the emergency trade market, which is usually used to meet urgent demand caused by problems in the long-term trade, whether for security reasons or political instability, or there are factors causing increased demand that are not taken into account. In Europe, for example, as temperatures drop, societies need to experience harsh winters.

In 2021, natural gas prices saw an increase unprecedented in the past few decades. The rise has been driven by a combination of factors, including competition for emergency deals in Europe and Asia, increased demand for gas in some economies as they recover from the negative effects of COVID-19, and supply declines in some exporting countries, such as Norway and Australia, due to scheduled and emergency maintenance.

Russia's reluctance to add additional gas extraction has also led to higher prices on international markets, as Russia has increased internal supplies to meet winter demand, and political tensions between Russia and Ukraine have also played a role in raising gas prices.

Finally, European natural gas inventories have fallen to their lowest level in a decade, driving up gas prices on international markets.

During the period October 2021 to December 2021, natural gas prices in the European market ranged from $24 to $37 per million British thermal units, while in the Asian market prices ranged from $33 to $38 per million British thermal units during this period.

Long-term contracts are priced at $10.70 per million British thermal units.

Types of natural gas and modes of transportation

There are different kinds of natural gas, including biogas, which is a fuel produced from natural waste under anaerobic conditions according to certain methods. In addition, there are gas extracted from the ground, which can be classified by depth as deep gas, that is, gas that is difficult to extract, and gas thousands of kilometers from the surface, which is the main type.

Natural gas can also be classified by density, with some used in the production of petrochemical products, the most used in home heating, power generation or factories, and also used in the production of fertilizer.

Natural gas is transported in two known ways:

The first method is to convert natural gas from a gaseous state to a liquid state and transport it by car, ship, or on specialized tankers.

The second method is for gas to be transported through pipelines that extend from production Wells to consuming or importing countries, in which case the gas also needs to be transferred from gaseous to liquid.

Some routes carry gas from extraction Wells to consumption points, both within countries, such as the United States, which has the largest gas transportation network connecting states, and between countries, the most famous being the 6,400km gas pipeline stretching from Russia's Siberia to European countries.

Then there is the nearly completed Nord Stream 2 pipeline, which will carry Russian gas to Germany at a cost of more than $10 billion.

Near the Arab region, there is a natural gas pipeline between Egypt and Israel. The Israeli occupying Power wants to build a pipeline to transport natural gas extracted from the Eastern Mediterranean to Europe so that Cyprus, Greece and the Israeli occupying Power can benefit from it.

The most important alternative to Russian gas for European needs

Russia is very important for Europe in terms of gas supply because it has large gas reserves, the largest in the world according to 2020 data, and the country supplies up to 18 percent of the gas to Europe.

If Russia's share of the actual supply could be compensated by other sources, such as Arab countries led by Qatar and Algeria, which are geographically close to Russia, they could extend gas pipelines through Russia to Europe, ensuring supply and reducing storage and transportation costs.

But given the political conflict between Russia and Ukraine and the West, Europe could absorb these transportation and storage costs, or ignore Russia by considering new ways to transport gas to Europe from other countries such as Qatar and Algeria, as well as Nigeria.