Carbon neutral LNG is gaining momentum

According to the World Natural Gas Network, Oman’s state-owned Liquefied Natural Gas (LNG) company and Royal Dutch Shell have recently signed an agreement to deliver the first batch of carbon-neutral LNG in the Middle East
.

The carbon neutral LNG cargo will be delivered from the Qalhat terminal in the Ash Sharqiyah region in northeastern Oman

Tap the potential of the natural gas industry

In fact, the concept of carbon neutral LNG has been around for several years
.

Under normal circumstances, carbon neutral LNG requires companies to implement a series of carbon reduction actions, including supporting renewable energy power generation, afforestation, energy saving and emission reduction, etc.
, to offset natural gas from upstream extraction, processing, to liquefaction, transportation, and regasification.
In order to achieve zero carbon emissions during the entire life cycle of natural gas

According to relevant data, although LNG is still a fossil fuel, compared with coal, the carbon emissions of natural gas are on average 45%-55% lower, and the emissions of other air pollutants are even lower
.

Up to now, most of the global oil and gas giants have announced carbon neutrality targets, indicating that they will significantly reduce the carbon emission intensity of their products

Gazprom’s vice chairman and export supervisor Bumistrova said that the delivery of carbon-neutral LNG shows that the natural gas industry can also help achieve global climate goals
.

Shell pointed out that Gazprom's provision of the first carbon-neutral LNG to Europe is of great significance and will help Shell provide the UK with zero-carbon emission natural gas

Bumistrova said: "Natural gas is still very important to global energy supply in the next few decades
.

The company is redoubled efforts to offset the impact on the environment through broader carbon reduction actions

Asia may become a hot spot for trade

Asia may become a hot spot for trade

In fact, carbon-neutral LNG trading has been implemented in many countries, and some countries have launched low-carbon LNG bidding activities
.

Compared with Europe, Asia has long been a hot spot for carbon-neutral LNG trade

As the world's second largest LNG importer, Japan has repeatedly purchased carbon-neutral LNG in recent years
.

As early as 2019, Tokyo Gas and many other Japanese energy companies purchased carbon-neutral LNG from Shell

　　In the second half of last year, a wholly-owned subsidiary of CNOOC also signed an agreement with Shell Oriental Trading Company to purchase two ships of carbon-neutral LNG
.

Total also delivered its first carbon-neutral LNG to CNOOC last year
.
In addition, Singapore and India have also reached carbon-neutral LNG deals in recent months
.

　　Thomson, an analyst at Wood Mackenzie, an energy consulting company, wrote that because Asian countries have stricter reviews of LNG's carbon footprint and require more detailed specifications for carbon emissions in tenders, this trend has also promoted the natural gas industry to accelerate the process of carbon reduction.

.

　　Cost competitiveness needs to be improved

　Cost competitiveness needs to be improved

　　Although carbon emission reduction is the general trend, some organizations believe that carbon-neutral LNG, which is at the forefront of the storm, will face new challenges
.
Many industry analysis agencies have calculated that carbon-neutral LNG is more expensive than traditional LNG, and the corresponding premium will be apportioned to all links of the industry chain, including end consumers
.

　　The Australian energy company Origin calculates that the total amount of carbon dioxide emitted by a standard LNG ship from production and transportation to sales and use is about 304,000 tons.
If the carbon price level of 10-20 US dollars/ton is used, it is caused by the requirement of carbon neutrality.
The "green premium" may be between 0.
8 and 1.
7 US dollars per million British thermal units, which is somewhat higher than the original price
.

　　Platts Energy believes that the price of carbon-neutral LNG may be 17% to 37% higher than that of traditional LNG
.

　　Industry analysts believe that in the short term, cost increases are likely to weaken the competitiveness of natural gas in the energy system.
To further promote carbon neutral LNG, buyers need to increase public awareness of carbon neutrality and convince end consumers to pay for it
.