The outbreak of war in Ukraine in February 2022 and fear of gas shortages by Putin unleashed panic among the European countries most dependent on Russian fossil pipelines and a fierce race to replace that dependency through alternative supply channels. .
Countries such as Germany, Poland, Italy and Greece, among others, have since projected million-dollar infrastructure to store liquefied natural gas (LNG) that could be far above the needs, according to the latest data update prepared by the Instituto think tank of Energy Economics and Financial Analysis (IEEFA).
Specifically, Europe has added 36.5 billion cubic meters (Bcm) of new LNG capacity since the beginning of 2022, an increase of 14%. That new capacity includes six new terminals, in addition to a previously inactive El Musel terminal in Spain and a new docked but not yet operational platform in Le Havre, France.
Additionally, an additional 143 billion cubic meters of LNG are being planned through 2030, bringing Europe's LNG capacity to 406 Bcm. The IEEFA predicts that demand for liquefied natural gas will not exceed 150 billion cubic meters in 2030, leaving a potential gap of about 256 billion cubic meters of unused LNG.
Data analyzed by the energy think tank suggests that gas consumption (both LNG and that coming through pipelines) in Europe is decreasing and is expected to be around 400 Bcm in 2030, meaning that LNG capacity could be similar to the continent's total gas demand.
The disappearance of Russia as a supplier has not been as expected after the outbreak of the war. In fact, Russian LNG supplies to Europe remain stable in 2023, with even countries like Spain and Belgium increasing their imports by 50% compared to 2022.
“Europe's annual LNG imports in 2022 increased by 59% compared to 2021, but growth has almost completely stagnated during 2023,” he notes.
On the consumption side the trend has been the opposite. At first, high gas prices caused demand to plummet, especially industrial demand, coupled with the strong push that the European Union has given to renewable energies. Thus, the data confirm that LNG imports from the European Union, Turkey and the United Kingdom amounted to 125 Bcm between January and September 2023, only 4% more than in the same period of 2022. While in the month of September with most existing warehouses on the continent full, imports fell 18% compared to September 2022.
"The decline in gas demand calls into question the idea that Europe needs more LNG infrastructure to achieve its energy security goals. The data shows that this is not the case. Despite significant progress in reducing gas consumption , European countries run the risk of changing dependence on Russian gas pipelines for a redundant LNG system that further exposes the continent to price volatility," warned Ana María Jaller-Makarewicz, energy analyst at IEEFA.
