The Institute for Energy Economics and Financial Analysis (IEEFA) has reported that the gap between Europe’s LNG capacity and demand continues to widen.
Europe has added six new LNG terminals in 2023, plus a previously mothballed terminal and a new floating storage regasification unit (FSRU) that is docked but not yet operational, while LNG imports have flattened and gas consumption keeps declining, IEEFA observed.
LNG import capacity is expected to reach 406 billion cubic meters (bcm) in 2030, an increase of 143 bcm from 2021 levels, while gas consumption is forecast to fall to around 400 bcm.
The utilization rate of Europe’s LNG terminals averaged 58% between January and September 2023, IEEFA claimed, noting that in the face of declining European gas consumption, it raises questions as to whether Europe needs to build additional LNG infrastructure through 2030.
“The decline in gas demand is challenging the narrative that Europe needs more LNG infrastructure to reach its energy security goals. The data is showing that we don’t. Despite significant progress towards reducing gas consumption, countries in Europe risk trading a reliance on Russian pipelines for a redundant LNG system that further exposes the continent to volatile prices,” Ana Maria Jaller-Makarewicz, an IEEFA energy analyst, said.
While European LNG imports from January to September 2022 increased by 62% in comparison with the same period in 2021, LNG imports in 2023 have flattened, increasing just 4% year-on-year, IEEFA noted, adding that meanwhile, the European Union (EU) has met its winter gas storage targets ahead of schedule.
The EU alone spent €41 billion on LNG imports between January and July 2023, with the U.S., Russia and Qatar the largest beneficiaries, IEEFA pointed out. As of September 2023, the EU, Türkiye and the UK had imported a total of 125 bcm of LNG.
European imports of Russian LNG between January and September 2023 remained steady compared to the same period in 2022, IEEFA further said.
To note, this IEEFA update is part of the institute’s ‘European LNG Tracker,’ a publicly available interactive data set to visualize Europe’s LNG infrastructure, demand and capacity outlook, as well as import and export flows.