Creating at-scale supply chains and supporting oil and gas infrastructure that allows for key decarbonisation technologies for LNG in the coming future.

Natural gas imports and exports are typically carried out in two ways: by pipelines as natural gas and by ships as liquefied natural gas. In addition, small amounts of natural gas are imported and exported by trucks as LNG and compressed natural gas (CNG).

Oil and gas transport and logistics at Aramex

In the past, the transport of natural gas was only available through pipelines due to a lack of available technology. However, with the emergence of technology allowing the liquefaction of natural gas, LNG became an internationally traded commodity.

According to a report by McKinsey, the COVID-19 pandemic has accelerated LNG market trends that were already underway. It noted that the long-term outlook for LNG is brighter than that of other fossil fuels due to its comparatively lower cost and lower emissions. However, to find a truly competitive advantage, LNG players must focus their efforts on five areas:

  1. Capital efficiency.
  2. Supply-chain optimisation.
  3. Downstream market development.
  4. Decarbonisation.
  5. Digital and advanced analytics.

LNG has lower cost and emissions than fossil fuels.

Despite its growing size and liquidity, the LNG market is far from an ideal “efficient” commodity market, according to the report. Additionally, an acceleration of LNG demand growth requires LNG producers to invest significantly in new downstream infrastructure, including import terminals, pipelines, and power plants.

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“LNG producers have to make a significant investments in new downstream infrastructure, including import terminals, pipelines, and power plants, paving the way for oil and gas logistics companies.”

The future of liquefied natural gas: Opportunities for growth. ©McKinsey & Company

TotalEnergies, for example, has partnered with Adani in India to build a five-million-tonne-per-annum LNG import terminal and a distribution network that supplies six million households and 1,500 compressed-natural-gas fuel stations.

Not only LNG but companies globally are also looking at logistics for more sustainable energy sources. For example, oil giant Chevron recently signed a joint study agreementto learn the feasibility of transporting liquefied carbon dioxide (CO2) from Singapore to permanent locations in Australia.

The firms, under the terms of the joint study agreement, will explore the technical and commercial feasibility of transporting up to 2.5 million tonnes of liquefied CO2 per annum by 2030.

Related article: 5 Busiest Shipping Routes of 2022 in the Growing Maritime Industry

This agreement is expected to complement the advancement countries are making in carbon capture, utilisation, and storage (CCUS) and will allow the exploration of more commercially driven solutions in CCUS, and alternate decarbonisation models.

However, CCUS uptake needs to grow 120 times over by 2050 for countries to achieve their net-zero commitments.

Carbon capture, utilisation and storage needs to grow 120 times over by 2050 for countries to achieve their net-zero commitments.

With the global freight and logistics market expected to grow from $14.5 billion in 2021 to $18.6 billion in 2026 at a CAGR of 4%, global trade activities are expected to increase, leading to a further increase in the volume of transporting goods to different countries. Meanwhile, the global retail oil and gas logistics market is expected to grow by $1.2 billion during 2022-2026, accelerating at a CAGR of 7% during the forecast period.

Related article: Supply Chain Logistics Barriers and How to Overcome Them

The global freight and logistics market is expected to grow from $14.5B in 2021 to $18.6B in 2026 at a CAGR of 4%.

However, the oil and gas industry and its logistics is time-consuming and require expert local knowledge. For instance, Aramex first entered this market in 2010 with a project for NPS, and has since seen considerable growth in its oil & gas logistics capabilities.

Oil and gas transport and logistics at Aramex

The global retail oil and gas logistics market is expected to grow by $1.2B during 2022-2026, accelerating at a CAGR of 7% during the forecast period.

Industry experts also claim that it is of utmost importance that we create at-scale supply chains and support infrastructure to allow for key decarbonisation technologies in the future. 

Key takeaway

Companies and stakeholders need to safeguard and strengthen each step of the supply chain network to ensure the transition to more sustainable energy sources in the coming future.

Oil and gas transport and logistics at Aramex

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