The LNG Supply Chain Explained

Natural gas in liquefied form is referred to as LNG. The only purpose of liquefying the gas is to transport it easily over very large distances.

The LNG supply chain is mainly through LNG carriers or LNG supertankers. It is also transported by specially built railway tankers or by road on LNG tanker trucks.

Typically, natural gas is transported as LNG when there is no connecting pipeline between the gas field from where it is tapped and the place where it is required. In such a scenario, the natural gas is extracted and processed, followed by liquefaction of the gas to convert it to LNG. This is then pumped into tanks for transport by sea or land.

However, a pipeline is a necessity to transfer the LNG between onshore tanks and tanks on the transport vessel or vice versa. Such pipelines are made using special technology that helps to maintain the prescribed temperature of the LNG.

LNG rig

Upon reaching its destination, the LNG may be re-gassed (converted into its gaseous form) and routed through pipelines to its customer. It is also stored as LNG in cryogenic tanks for re-gassing at a later point in time.

It can be said that the discovery of a method to liquefy natural gas made the LNG supply chain possible.

The LNG supply chain consists of the following processes:

  • Extraction and processing of natural gas and processing of natural gas
  • Liquefaction
  • Transport by supertankers or special road trucks
  • Regasification (conversion back to gaseous form)
  • Delivery to the customer through the pipeline

Natural gas was not a very popular fuel until a method to liquefy it was discovered by scientists in the 1880s. Later on, special cryogenic tanks were developed to store the LNG.

This unpopularity stemmed mainly from the difficulty in the logistics of getting it across to consumers who were located far away from the gas fields and major pipelines.

However, with the discovery of a method to liquefy natural gas and to store and transport it easily, many industries began using natural gas as fuel.

LNG terminal

Conversion of Natural Gas to LNG

Organic matter that was buried under the earth millions of years ago was converted into oil, natural gas, and coal due to the intense heat and pressure of the earth’s crust. These three materials are used as fuels and are called fossil fuels.

The main constituent of natural gas is methane (CH4). Ethane (C2H6) is present in a small proportion. When the gas is cooled down to a temperature of −162 °C (−259.6 °F), condensed, and some components removed from it, it takes on a colourless and non-toxic form called liquified natural gas.

In its liquified state, it occupies very little volume when compared with gas. This is about 600 times less than the volume occupied by natural gas.

When the LNG is processed at a normal atmospheric temperature it is converted back to the gaseous form.

The US and Russia are the world’s largest producers of natural gas with the former producing 914.6 billion cubic meters and the latter 638.5 billion cubic meters. Australia, Qatar, and the US are the world’s largest exporters of liquified natural gas (Source: Statista)

LNG Storage

Typically, large quantities of LNG are stored in large, well-insulated, special steel alloy inner tanks. These tanks which are normally cylindrical with dome-shaped tops, have an outer covering of special reinforced cement concrete (RCC).

LNG tanks are built to withstand very high pressure and extremely low temperature. These tanks are of three types – fully pressurized, fully refrigerated, and semi-pressurized and refrigerated.

Vacuum-jacketed pressure tanks are used to hold smaller quantities of LNG.

LNG Carriers and Supertankers

LNG tanker

LNG carriers and supertankers are double-hulled and normally have between four to six large tanks. These dome-shaped special steel alloy tanks are layered, well-insulated, and can withstand high pressure.

The double hull of an LNG tanker protects it from damage or leakage while at the same time providing a kind of insulation.

However well the tanks are insulated, there will still be some evaporation of the LNG, giving off something called the Boil Off Gas (BOG). It is interesting to note that most modern LNG carriers use the BOG to power their engines!

Excess BOG is collected, reprocessed, and added back to the tank or it may be tapped separately.

Floating Production, Storage, and Offloading Units (FPSO)


FPSO units are rapidly becoming the mainstay of the oil and natural gas industry by combining the tasks of an oil rig and supertanker. These offshore units are essentially modified ships with natural gas extraction and processing machinery located above the deck. It can extract, process, liquefy, or compress natural gas.

The storage facilities are generally located below deck and are capable of transferring LNG to supertankers and other vessels.

FPSO units are preferred by offshore oil and gas fields for their efficient utilization of space. They can also be easily relocated to new fields. Since they are modified ships, they can move by self-propulsion while also being able to link with other LNG carriers to increase the production capacity.

FPSO extraction turrets make use of a complex system of hydraulic pumps and valves. The ship can move under natural wave motion without disturbing the riser carrying the gas from the seabed.

The LNG industry has FPSO units that are unique for the extraction of natural gas. These are technically referred to as Floating Liquefied Natural Gas Units (FLNG Units).

LNG Terminals

Large vessels equipped with LNG tanks require dedicated loading and unloading space. Terminals dedicated for this purpose are called LNG terminals. They are usually located near LNG plants where natural gas is liquified, stored, and re-gassed.

Special pipes connect the LNG plant to LNG carriers or other types of transport. Modern LNG terminals are designed to reduce the risks of accidents. The several LNG terminals across the world support a robust global LNG supply chain.

LNG terminal ship

Uses of Liquified Natural Gas

Natural gas finds a wide variety of use in industrial and domestic applications these days. It is mainly used to generate electricity. It is used as a fuel in furnaces, industrial boilers, etc.

Considering its low carbon dioxide (CO2) emission, it is gaining popularity as a fuel for powering automobiles such as cars, buses, and trucks.

As we have seen earlier, it is also used as fuel by LNG carriers, supertankers, ferries, etc. In many countries, natural gas is used for cooking and heating purposes.

CNG and LNG are often confused with each other. Both are natural gas but in different physical forms. While CNG is Compressed Natural Gas (CNG), LNG is natural gas in liquified form.

Advantages of Natural Gas

The advantages of natural gas far outweigh its disadvantages. It is considered one of the cleanest and most eco-friendly fossil fuels in terms of carbon dioxide emission. It produces 30 – 45% less CO2 to generate heat than fuels like petroleum, diesel, or coal.

Natural gas can be stored and transported easily, especially when converted to a liquid form. In recent times, LNG has become a cost-competitive fuel for powering various forms of transport while being environmentally friendly.

The LNG supply chain is not without its dangers. Explosions and spillages can happen at LNG terminals as well as on LNG carriers, though modern technology helps to reduce such incidents to a great extent.

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Disclaimer: The authors’ views expressed in this article do not necessarily reflect the views of Marine Insight. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Marine Insight do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendations on any course of action to be followed by the reader.

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About Author

Hari Menon is a Freelance writer with close to 20 years of professional experience in Logistics, Warehousing, Supply chain, and Contracts administration. An avid fitness freak, and bibliophile, he loves travelling too.

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