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LNG in the energy mix

Liquefied natural gas (LNG) is, as its name suggests, is natural gas in liquid form. LNG is formed by chilling gas to -161 degrees centigrade so that it occupies 600 times less space than in its gaseous form. This makes it an ideal way of storing and transporting large volumes of gas from places such as Algeria, Trinidad and the Middle East.

LNG is essentially the gas used to heat our homes and businesses, cook our food and heat our water and is well established as a vital element of Britain's gas supplies. It will become increasingly important as UK import dependency is forecast to exceed 75% by 2030.

Over time, as indigenous supplies from the UK Continental Shelf diminish, LNG could make up a significant percentage of the UK's gas supply requirement. However, it will be for the market to decide how much. Grain LNG is ideally placed with existing assets and capability to expand considerably to help address this deficit.

The strategic need for LNG

Traditionally the UK has met demand from its gas sources in the North Sea, but these supplies are in decline. In order to meet this supply shortfall, it is estimated that by 2030 around 75% of the UK's gas will have to be imported. Importing natural gas in the form of LNG from around the world makes economic sense when transporting over long distances. LNG importation is also playing an important role in increasing the security and diversity of energy supplies to the UK. In 1997 the gas industry, along with the regulator Ofgem, opened up the UK gas market to competition. It is this competition which enables a variety of shippers, as Grain LNG customers, to bring LNG from around the world into the UK market via National Grid's Grain LNG terminal.