Natural gas has become a transitional energy source towards clean energy, and human beings are increasingly relying on it. Although there is a large amount of natural gas on earth, most is in remote areas. In order to facilitate transportation and reduce volume, natural gas will be converted into liquefied natural gas (LNG). With the development of shale oil, the United States has surpassed Russia to become the world's largest natural gas producer in the past decade and has become the biggest beneficiary of this European natural gas crisis.
Despite global efforts to reduce reliance on fossil fuels, natural gas consumption hit a record high in 2021, 3.3% higher than the record set in 2019. Natural gas is the cleanest burning fossil fuel but it is also the fastest growing fossil fuel, with an average annual growth rate of 2.2% in the past ten years, compared with the global oil growth rate of 0.7% in the past ten years and the global coal growth rate of 0.1%. Natural gas is expected to be the only fossil fuel that will see significant growth in demand over the next two decades.
The United States began to develop shale oil in 2005, while natural gas production has soared. Last year, U.S. production was 91% higher than in 2005, hitting a record high. The United States has become the hegemon of natural gas. According to BP's Statistical Review of World Energy data, the world's top 10 natural gas producers accounted for about 73% of total production last year, of which the United States is the largest natural gas producer, accounting for 23% worldwide, followed by Russia with 17%. Third-ranked Iran and fourth-ranked China only account for about 5% of production. China's natural gas production will grow 7.8% in 2021, nearly doubling since 2011, thanks in part to government policies to encourage coal-to-gas shifts. In terms of reserves, Russia's natural gas reserves still rank first in the world.
The surge in U.S. natural gas production has also catapulted the United States to the top spot in the world in natural gas liquids (NGL) production. The United States accounts for 44.8% of global production, most of it used in refineries or petrochemical production. But the U.S. is also the largest consumer of natural gas, with most of its gas production used to meet domestic demand, lagging behind Australia and Qatar in liquefied natural gas (LNG) exports. In 2021, Australia and Qatar will account for about 21% of exports, the United States will account for 18.4%, Russia in third with 7.7%, and Malaysia with 6.5%.
United States is the biggest beneficiary of the Ukrainian war. In the past two years, half of U.S. LNG was exported to Asia, and now the volume of freight to Asia has dropped by half. According to the U.S. Energy Information Administration, U.S. LNG shipments to Europe accounted for about three-quarters of total shipments in the first four months of 2022 and daily LNG shipments from the U.S. to Europe increased by two-fold over last year. Before Russia invaded Ukraine, the U.S. shipped only a third of its total shipments to Europe. Currently, nearly half of Europe's LNG imports come from the United States.
The United States is the world's fastest-growing LNG exporter, with an average annual growth rate of 49.1% over the past decade, with LNG exports growing 100% from 2019 to 2021, and is expected to become the world's largest LNG exporter this year. Nikolai Petrushev, secretary of the Russian Federal Security Council, once said that not only is the European natural gas market controlled by American companies but American companies are also interested in supplying Europe with semiconductors and other high-tech fields, saying that "American companies and financial institutions are rapidly expanding to Europe, using the Ukraine crisis to their advantage."
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