LNG Chain

Explainer

The LNG value chain end to end

The LNG value chain is the sequence of production, treatment, liquefaction, shipping, regasification and distribution that moves natural gas between markets no pipeline connects, at an end-to-end energy cost of roughly 10 to 20 per cent of the gas itself.

Every stage exists to solve a problem created by the one before it. Read in order, the chain makes sense; read as a list of facilities, it does not.

Production and gathering

Gas comes out of the ground either on its own or dissolved in oil. Associated gas — produced alongside crude — was historically flared for want of anywhere to send it, and a good deal of LNG capacity exists to monetise gas that would otherwise be burned at the wellhead.

Field gas arrives at the plant wet, sour, and carrying heavier hydrocarbons. Almost nothing about it is ready for liquefaction.

Treatment

This is the part most descriptions skip, and it is frequently the larger half of an export terminal.

Carbon dioxide has to come out to single-digit parts per million, because it freezes solid at liquefaction temperature and blocks the main exchanger. Water has to reach about 0.1 parts per million for the same reason. Hydrogen sulphide is toxic and corrosive. Mercury attacks the aluminium the exchangers are made of. Heavier hydrocarbons freeze, and are worth more sold separately as natural gas liquids anyway.

The size of the treatment section is set entirely by what came out of the ground, which is why two plants with identical liquefaction capacity can look completely different.

Liquefaction

Treated gas is chilled through a refrigeration cycle until it condenses at around minus 162 degrees. This is where the capital and the energy concentrate: 8 to 12 per cent of the feed gas is consumed driving the compressors.

A plant is built from trains, each a complete self-contained line producing roughly 5 to 8 Mtpa at modern scale. Trains are added over time, which is why a terminal’s capacity arrives in steps and why a single site can have trains at three different statuses at once.

Storage and loading

Liquid runs into insulated tanks at close to atmospheric pressure, then to a jetty when a ship arrives. Loading a conventional cargo takes roughly twelve hours at rates around 10,000 to 12,000 cubic metres an hour, plus the time to connect, cool down the arms, and complete the custody transfer measurement that decides what is paid.

Shipping

An LNG carrier is the only part of the chain that moves, and the part with the least slack in it. The world fleet is small, the yards that can build one are few, and freight rates swing by an order of magnitude within a year as a result.

The voyage is a cycle rather than a trip. A laden leg delivers the cargo; a ballast leg returns the ship with only a heel retained to keep the tanks cold. Both legs cost money and only one earns.

Unloading, storage and regasification

At the far end the process reverses, and it is markedly simpler. Liquid is pumped ashore into tanks, then vaporised — with seawater where the sea is warm enough, by burning a little of the gas where it is not, or by ambient air in hot dry climates.

Or none of that happens ashore at all: an FSRU does storage and vaporisation aboard a moored vessel, which is how a country can add import capacity in a year rather than five.

Send-out and distribution

Regasified LNG enters the grid and becomes ordinary gas, indistinguishable from piped or domestic supply. Odorant is added here, downstream, because mercaptan would freeze in the liquid.

For an import terminal, send-out rate is the capacity figure that matters, not storage volume. A terminal exists to push gas into a network at whatever rate the market wants, and in a cold snap that is far above average.

What the chain costs

Roughly a tenth to a fifth of the gas, in energy, from wellhead to grid. Liquefaction takes the largest share, shipping a few per cent more on a long route, regasification one or two.

That total is the number to hold in mind when comparing LNG with a pipeline. A pipeline loses gas to compression too, but far less, which is why LNG only wins where a pipeline is impossible, uneconomic, or politically unavailable. LNG against pipeline gas works through where that line falls.

Who owns what

There is no standard structure. Some chains are integrated end to end by a single company that produces the gas, liquefies it, owns the ships and sells into its own markets. Others are split at every joint: a plant that tolls gas for a customer who owns the molecules throughout, a ship on time charter to a third party, a cargo sold and resold in transit.

That fragmentation is why the ownership data on this site rewards reading carefully. An owner, an operator and a parent are three different relationships, and a terminal page shows all three because conflating them is how analyses go wrong.

Common questions

Each answer stands on its own.

What are the stages of the LNG value chain?
Production from a gas field, treatment to remove impurities, liquefaction, storage and loading at an export terminal, shipping by LNG carrier, unloading and storage at an import terminal, regasification, and send-out into a pipeline grid.
Which stage costs the most?
Liquefaction, by a wide margin, in both capital and energy. An export terminal is the most expensive single asset in the chain and consumes 8 to 12 per cent of the gas it processes.
How long does a cargo take to deliver?
The voyage itself is typically one to four weeks depending on the route. Qatar to north-west Europe is around two weeks; the US Gulf to Japan through Panama is around three, and considerably longer if the canal is unavailable and the ship routes via the Cape.
Who owns the different stages?
It varies enormously. Some chains are integrated end to end by one company; others split every stage between different owners, with the plant tolling gas for a customer who owns the molecules and charters the ship separately.
What happens to the gas after regasification?
It enters the receiving country's pipeline grid and is indistinguishable from domestically produced or piped gas. Odorant is added downstream, because it would freeze in the liquid.

Last reviewed 2026-09-07.