In Sweden, the price of natural gas is more often than not based on the cost of alternative fuels. As a rule, the customers’ current fuel is fossil-based and often oil, which is why the price of natural gas follows the price of oil, sometimes described as oil indexing.
In recent decades, the price of natural gas has also risen and followed the oil price trend. The media sometimes mentions the spot price of natural gas but in Sweden only a negligible proportion is purchased in this way. This price model is more prevalent on the European market.
A comparison must be based on overall
Comparing prices/volume of different fuels can be very misleading. Different fuels have different energy contents and therefore different levels of efficiency. Depending on the industry, there is a range of possible savings to be made. This may involve better availability, higher efficiency, lower energy consumption, lower taxes or reduced maintenance, etc.
The costs should include all cost savings liquefied natural gas entails for the customer. For example, within a heavy industry, such as a steelworks, it may look like this:
- More efficient combustion
- Less need for heating
- Lower energy consumption
- Cleaner premises
- Better working environment for personnel
- Lower energy tax
- Long-term environmental benefit
- Saving for end customer
Liquefied Natural Gas is also economically sustainable within shipping
It has been documented clearly that liquefied natural gas constitutes a competitive alternative to traditional maritime fuels, even taking into account the investment in the ship’s engine installation or conversion. Natural gas reduces emissions without needing additional cleaning technology such as that required when using thick oil (HFO) or marine diesel (MDO). It is true that tanks for liquefied natural gas take up more space but no equipment is required to treat exhaust gases, and the working environment is much cleaner. Today, there are also flexible engine solutions for both natural gas and diesel, so called dual fuel technology.
