Europe Gears Up LNG Imports As Global Competition For Fuel Grows
Europe was the most prominent & biggest importer in the global liquified natural gas sector in the year 2022, with the region buying considerably higher volumes than its competitors as it attempts to replace the shrinking Russian pipeline gas supplies. As per the news, EU nations acquired 101mn tonnes last year, which is 58% more than in the entire of 2021, as per the data provided by Refinitiv.
In previous years, the EU fall down to Japan and China on LNG imports but Russia’s attempt at energy weaponisation since its invasion of Ukraine has compelled the bloc to adopt alternative fuel sources.
Due to Europe’s requirements to import higher volumes to cater to its storage facilities in 2023, the global LNG market is expected to stay tight, possibly pushing up costs for gas users across the world.
“When the prices increase in Europe, Asia undoubtedly is required to expand the amount it pays accordingly to survive the competition to attract LNG cargoes,” stated Olumide Ajayi, senior LNG analyst at Refinitiv. “Europe has turned into a top-notch market.”
EU nations’ search was supported by the decrease in demand in China, stated Namit Sharma, global co-leader of oil and gas at consultancy McKinsey. Beijing’s rigid zero-Covid policy led to a reduction in the economy and decreased demand for energy in 2022. “Had Chian aught more LNG, it would have been challenging for Europe to source that gas,” Sharma stated.
The total LNG imports of China in the year 2022 were 64.5mn tonnes, while in 2021, it was the biggest importer internationally, with 79mn tonnes. The country also re-traded some excess LNG to Europe this year, aiding in filling up the bloc’s gas storage.
Last year, the EU”s LNG imports were equivalent to 137bn cubic metres worth of natural gas, which is close to around 140bn cm of pipeline gas it attained from Russia in 2021. Experts, however, cautioned that Europe would necessitate buying more LNG in 2023, as it begins the year generally drained of Russian pipeline gas, as Moscow shifted to halt supplies.
Meanwhile, China has likewise dropped its zero-Covid regulations, which experts expect will cause a restoration of LNG demand - though not to the same level as in 2021, as Beijing has incorporated enormous amounts of renewable energy and is creating its domestic gas supply.
LNG currently makes up around 35% of Europe's gas supply, up from 20% last year, as per the data from think-tank Bruegel.
The International Energy Agency cautioned in December that the EU might struggle with a potential gas supply-demand gap of 27bn cm in 2023 in circumstances where the Russian pipeline gas deliveries fall down to Zero, and China’s LNG imports bounce back to 2021 levels.
Enhancements in energy effectiveness and speedy growth of renewables would help to fill the gap, the IEA stated. These movements will be required "to cater to the states of refilling gas storage levels to 95% and retaining gas supply security through to the spring of 2024 without extreme burdens on business sectors and European purchasers.