Green energy: Europe may have invested too much in LNG, report says

Would the European Union have had its eyes bigger than its stomach? Europe could find itself with oversized liquefied natural gas (LNG) import capacities compared to moderate increases in gas demand, warns think tank IEEFA (Institute for Energy Economics and Financial Analysis) in a report released Tuesday. Since Russia's invasion of Ukraine, Europe has commissioned a total of "36.5 billion cubic meters of new capacity"; and “106 billion cubic meters of additional capacity” of LNG imports are planned by 2030, which would bring Europe's total LNG import capacity to 406 billion cubic meters, according to this report.

Strong growth which ultimately makes the IEEFA fear “a significant gap between the expected demand for LNG in Europe and the new regasification capacities currently under construction and planned”. The report predicts that European LNG demand “will not exceed 150 billion cubic meters in 2030,” leading to a potential gap of “nearly 256 billion cubic meters of unused capacity.” Based on gas consumption in Europe in 2023, the IEEFA lowered its LNG demand forecast compared to the projections it had previously established.

LNG imports by Europe (EU, Turkey and the United Kingdom) amounted to some “125 billion cubic meters between January and September 2023, an increase of 68% compared to the same period in 2021, but only around 4% more compared to the period in 2022,” indicates the report, which therefore notes a slowdown in the growth of demand, after a surge in the months following the start of the war in February 2022.

While some 19.5 billion cubic meters of new capacity were put into service in Europe in 2023 (after an additional 17 billion in 2022), imports increased by only 4.8 billion compared to the previous year , says the IEEFA. It indicates that the trend is even towards lower import levels since July 2023 compared to 2022: “a significant drop occurred in September 2023, when LNG imports were 18% lower than the volumes imported in September 2022,” supports the organization in its report. “Between January and September 2023, the average utilization rate of EU LNG import terminals was 58%,” assures IEEFA.