LNG export diversification and demand security: A comparative study of major exporters

Abstract

Global demand for liquefied natural gas (LNG) has doubled over the past decade. The long-term outlook for natural gas is strongest among the fossil fuels. Specifically, LNG is expected to play an increasing role in meeting global natural gas demand, as it provides a flexible link between geographically separated suppliers and customers. In the context of the growing role of LNG in the global energy system, this paper focuses on the world's five largest LNG exporters: Australia, Qatar, the United States of America (USA), Russia and Malaysia. In 2021, they accounted for three-quarters of the global supply. By focusing on exporters, the paper addresses the bias in energy policy literature, which is largely concerned with energy importers. The paper engages in a comparative analysis of LNG exports by five suppliers by considering the extent of their diversification. Focusing on the 2009–2021 period, the paper leverages eight variables to explain patterns of diversification of LNG exports among suppliers and over time. The paper finds that the geographical location and gas price differential across regional markets have the most explanatory power. This finding has significant policy implications for the behaviour of LNG exporting states, demonstrating high sensitivity to economic factors.