This year, Europe is importing record amounts of liquefied natural gas (LNG) in order to minimise reliance on Russian pipeline gas and replenish gas storage ahead of next winter, says an article published in Oilprice.
Higher spot LNG prices
The European Union and the United Kingdom had record-high LNG imports in April 2022, with imports averaging 16.5 billion cubic feet per day (Bcf/d) on certain days and exceeding 19.0 Bcf/d on others, according to the US Energy Information Administration.
LNG imports into Europe increased this year due to unusually low gas storage inventories from the autumn of 2021 through the spring of 2022.
Europe’s energy needs were not being met by pipeline gas, therefore higher spot LNG pricing in Europe compared to Asia enticed producers with destination flexibility to export LNG to Europe.
According to the EIA, the majority of those suppliers came from the United States.
Supply contracts
LNG imports into the EU and the UK averaged 14.9 Bcf/d in the first five months of 2022.
According to data from CEDIGAZ given by the EIA, this is 66 percent greater than the annual average in 2021 and 4.7 Bcf/d higher than the pre-pandemic high of 10.3 Bcf/d in 2019.
There are LNG import facilities in 14 European countries at the moment, however their use varies by location.
According to the EIA, the northern and southern components of the European natural gas pipeline infrastructure are not fully connected.
More countries are looking at the LNG market and supply contracts with gas suppliers other than Russia as Europe strives to terminate its reliance on Russian natural gas by 2027.
Germany, Europe’s largest economy, has two LNG projects in the works.
Energy crisis
Europe has been the main driver of global LNG demand for more than six months, as it seeks to replace as much Russian pipeline gas supply as quickly as possible.
Europe has supplanted Asia as the major driver of LNG demand since last autumn’s energy crisis, and is no longer “the market of last resort” for LNG cargoes.
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Source: Oil Price
