More than half of Europe’s LNG capacity is at risk of sitting idle

It has been determined that the capacity of Europe’s liquefied natural gas (LNG) terminals will exceed 400 billion cubic meters by 2030, and more than half of this capacity is at risk of sitting idle due to low demand.

According to the European LNG Tracker report from the Institute for Energy Economics and Financial Analysis (IEEFA), the LNG infrastructure capacity of Europe, including the UK, Norway and Turkey, reached 270 billion cubic meters by the end of 2022.

IN SEARCH OF AN ALTERNATIVE TO RUSSIAN GAS, EUROPE ACCEPTS LNG

After the war launched by Russia in the Ukraine, Europe, looking for alternative ways and resources to reduce dependence on Russian gas, accelerated its investments in LNG and a large capacity development in this area is expected until 2030.

Europe’s LNG infrastructure capacity is expected to exceed 400 billion cubic meters by 2030, while the demand for LNG in Europe is expected to reach the level of 150 billion cubic meters in this period.

Therefore, there is a risk that LNG infrastructure with a capacity of approximately 250 billion cubic meters in Europe will remain idle. Spain, Turkey, the United Kingdom, France, Italy and Germany stand out as the countries where the most idle capacity can be produced.

The planned LNG infrastructure capacity in Europe by 2030 is estimated to exceed the European Union’s gas consumption of 413 billion cubic meters in 2021. By contrast, total gas demand in Europe in 2030 is expected to be 390 billion cubic meters.

‘THE MOST EXPENSIVE AND UNNECESSARY POLICY IN THE WORLD’

Report author and IEEFA analyst Ana Maria Jaller-Makarewicz said that excess LNG capacity is “the world’s most expensive and unnecessary guarantee policy”, adding that “Europe must carefully balance its gas and LNG”. The increase in LNG infrastructure will not increase the reliability of the system. This is also a situation that poses the risk of these assets being idle.” she used her statements.

Expressing that LNG infrastructure is expensive to build and operate, Jaller-Makarewicz said: “Decisions to expand LNG infrastructure in Europe should be based on future demand needs. The EU aims to reduce gas demand by a third by 2030. All this must be taken into account”. he performed the assessment of it.

RUSSIAN LNG DEPENDENCE DEPENDS

Although Europe’s pipeline gas imports from Russia dropped significantly after the war, LNG imports increased.

According to IEEFA, Europe received 20.2 billion cubic meters of LNG from Russia in 2022. This was recorded as a 12 percent increase compared to LNG imports, which was 18 billion cubic meters in the previous year. Russia has become the third largest supplier of LNG to Europe after the United States and Qatar.

While France is the largest importer of LNG in Europe with 35.7 billion cubic meters in 2022, 7.4 billion cubic meters of this import came from Russia.

While Spain supplied 5.2 billion cubic meters of a total 29.5 billion cubic meters of LNG imports from Russia, Belgium received 3 billion cubic meters of the 12.9 billion cubic meters of LNG imports from Russia.

French and Belgian LNG imports from Russia increased by 58 percent in 2022, while LNG imports from Spain increased by 50 percent.

Although the UK was the third largest importer of LNG in Europe at 26.5 billion cubic meters last year, Russia’s LNG imports fell by 85 percent compared to 2021.

Last year, the Netherlands imported 17.1 billion cubic meters of LNG, Turkey 15.5 billion cubic meters and Italy 14.8 billion cubic meters. (AA)