LNG (Liquefied Natural Gas)

Definition

LNG (Liquefied Natural Gas) is natural gas — predominantly methane (CH₄) — that has been cooled to approximately −162°C (−260°F) at atmospheric pressure, causing it to condense into liquid form. In liquid state, LNG occupies approximately 1/600th the volume of gaseous natural gas, making it economically viable to ship across oceans in purpose-built LNG tankers.

LNG is not a different fuel from natural gas — it is the same commodity in a different physical state. At the receiving terminal, it is warmed and regasified, then distributed via pipeline as conventional natural gas. The LNG chain simply enables natural gas to be traded globally between markets not connected by pipeline.

The LNG value chain

The liquefaction and shipping stages represent approximately 30–40% of the delivered LNG cost to the end market, which is why LNG is structurally more expensive than pipeline gas to nearby markets. Europe's post-Russia shift to LNG imports has raised its structural gas cost floor. For the European gas price implications, see our analysis of European gas prices 2025–2026 and Russia gas cut-off completion.

LNG price benchmarks

The Henry Hub vs JKM/TTF spread drives LNG arbitrage. US LNG export economics are typically Henry Hub + ~$2.25–3.00/MMBtu liquefaction fee + shipping (~$1–3/MMBtu). When JKM or TTF exceeds Henry Hub by more than this total, US LNG exports are commercially attractive, directing cargoes to the higher-priced market.

For the WTI crude benchmark that parallels LNG's oil-price discovery role, see our WTI glossary entry. For spot price mechanics generally, see our spot price entry.

Major LNG exporters and importers (2026)

LNG and fuel pump prices: the connection

LNG prices affect pump prices through several channels:

• Gas-to-power generation: Where natural gas generates electricity, LNG supply tightness raises electricity prices, indirectly affecting EV running costs. High European gas prices (post-2022) raised electricity costs for home EV charging.
• Gas as CNG/LPG precursor: Natural gas is processed into CNG and LPG at the refinery gate. Higher gas prices raise CNG pump prices. See our CNG glossary entry.
• Diesel production energy: Refineries use significant quantities of natural gas as process heat and hydrogen production feedstock. Higher gas prices raise refinery operating costs and thus product margins.
• Naphtha-ethylene-petrochemical chain: LNG price spikes affect petrochemical feedstock costs, indirectly influencing plastic and additive costs in the fuel supply chain.

The most direct LNG-to-pump-price link in 2022–2026 was the European diesel connection: high TTF gas prices raised refinery energy costs and feedstock costs, contributing to the record European diesel prices in 2022–2023 documented in our global diesel shortage analysis.

For LNG's role in major energy events, see our coverage of Gastech 2026 and Gastech 2025.

What is LNG — meaning, definition and global significance

What is LNG? The LNG meaning is straightforward: liquefied natural gas is methane cooled to approximately -162 degrees C until it becomes a liquid, reducing its volume by roughly 600 times. This makes it economical to transport by ship to markets that lack pipeline connections. The term "LNG" always refers to this cryogenic liquid form of natural gas — once regasified at the destination terminal it becomes the same pipeline gas used for heating, power generation and industrial processes. The U.S. EIA LNG explainer covers the full liquefaction-to-regasification chain, while the IEA's gas market reports track global LNG trade flows and capacity additions.

LNG has become a cornerstone of global energy security, especially since Europe accelerated its pivot away from Russian pipeline gas after 2022. Germany, for example, built several floating storage and regasification units (FSRUs) in under a year to diversify supply. The European Commission's LNG strategy page outlines how the EU is building out import capacity, and the OPEC Annual Statistical Bulletin provides context on how LNG competes with oil-derived fuels in the broader energy mix.