Liquefied Natural Gas (LNG)

Pipeline infrastructure limits where natural gas can travel overland, which is why LNG exists. By chilling gas to liquid form, its volume shrinks to roughly 1/600th of its gaseous state, making ocean shipment practical. Specialized tankers carry the liquid LNG to import terminals in other countries, where it is warmed back into gas — a process called regasification — and fed into local pipeline networks. This means LNG links markets that would otherwise be completely separate, like the US Gulf Coast and Japan. For context on the energy this gas carries, see the MMBtu entry.

Because LNG is traded globally on a cargo-by-cargo basis rather than through a single exchange, its pricing is more fragmented than pipeline gas. Key benchmarks include the Japan-Korea Marker (JKM) for Asian deliveries and the Title Transfer Facility (TTF) in Europe. These prices can diverge sharply from the US Henry Hub price when regional demand spikes — for example, during extreme winter cold in Asia or supply disruptions in Europe. The natural gas guide explores these regional dynamics in detail.

A common confusion is treating LNG prices and Henry Hub prices as the same thing. They are connected — US LNG exports draw gas away from domestic supply, which can push Henry Hub prices higher — but they are not identical. LNG prices also include the significant costs of liquefaction, shipping, and regasification. Traders typically watch LNG freight rates alongside commodity prices to understand the full delivered cost at any destination. You can monitor related energy prices on the commodities page.