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European LNG capacity Outlook

Since Russia’s invasion in Ukraine European countries are betting on efficiency measures and increased LNG imports from non-Russian sources to help cut the continent’s dependence on Russian gas; after the start of the war several countries announced new LNG terminal projects or expansion. Thanks to more than 30 projects Europe’s LNG capacity is expected to take off between the end of 2022 and 2026 from 279 billion cubic metres (bcm) per year to 409 bcm/y. Chart 1 shows LNG capacity forecasts until 2030 for the top 10 European countries, accounting almost 90% of the whole continent.

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The reduction on the volumes of Russian piped gas that took place in 2022 has had parallel and opposite effects. On one side, countries have felt the need to build more LNG regasification terminals to import gas from other sources to guarantee a secure source of energy. But on the other hand, the crisis has also shown Europe’s great dependency on fossil fuels and has encouraged the development of more renewable energy projects. As consequence of that the outlook of regasification capacity is growing, but the forecasted demand remains steady and is expected to decline in the next years.

In 2022 the largest importers of LNG were France (35.7 bcm), Spain (29.5 bcm) and the United Kingdom (26.5 bcm), followed by the Netherlands (17.1bcm), Türkiye (15.5 bcm), Italy (14.8 bcm), and Belgium (12.9 bcm). IEEFA’s analysis and calculations forecast a 19% increase in LNG demand in 2023. However, demand is expected to fall by 5% in 2024 and to drop at least 40-45% from 2019 values after implementing the measures outlined in the REPowerEU plan.

Any imbalance between LNG demand and capacity can be analysed with terminal utilization rate. Utilization rate of Europe’s LNG terminals in 2022 reached 62% (21% more than 2021) but by the end of the decade IEEFA projects a significant drop to 36%, including the planned LNG terminals (Chart 2).

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European gas shortages may not be over yet, especially during cold seasons, but capacity issues will be solved in a few years; who’s missing? The supplier.

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alberto.testino1996

alberto.testino1996

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