Europe is the largest customer in the global liquefied natural gas market in 2022, with the region importing significantly higher volumes than rival buyers as it seeks to alternate supplies. gas through Russia’s dwindling pipeline.
In previous years, the EU lagged behind Japan and China in LNG imports, but Russia’s weaponization of energy since its invasion of Ukraine has forced the bloc to look for alternative fuel supplies.
With the need for larger volumes of European imports to fill storage facilities by 2023, the global LNG market is growing rapidly. is set to remain tightpotentially pushing up prices for gas users around the world.
“As prices rise in Europe, Asia will have to [increase the amount it pays] accordingly, to be able to compete for LNG shipments,” said Olumide Ajayi, senior LNG analyst at Refinitiv. “Europe has become a premium market.”
Data from Refinitiv shows that EU countries imported 101 million tonnes of LNG in 2022, 58% more than the previous year. The bloc accounted for 24% of global LNG imports during the period.
European demand was supported by a drop in demand in China, said Namit Sharma, global co-head of oil and gas at consulting firm McKinsey. Beijing’s strict no-Covid policy has led to a slowdown in the economy and reduced energy demand by 2022. “If China buys more LNG, it will be difficult for Europe to really find gas sources. there,” said Sharma.
China’s LNG imports in 2022 totaled 64.5 million tons; in 2021, it is the largest global importer with 79 million tons. The country has also re-exported some excess LNG to Europe this year, helping to replenish the bloc’s gas reserves.
The EU’s LNG imports last year were equivalent to 137 billion cubic meters of natural gas, roughly equal to about 140 billion cubic centimeters of pipeline gas the EU will receive from Russia in 2021. However, analysts warn that Europe Europe will need to import more LNG by 2023, as it begins a year with almost no Russian gas pipelines, as Moscow moves to shut down supplies.
Meanwhile, China has also dropped its Covid-free rules, which analysts expect will lead to a resurgence in LNG demand – although not to the level of 2021, as Beijing has rolled out. a large amount of renewable energy and is building a domestic gas supply .
According to data from research institute Bruegel, LNG now accounts for about 35% of Europe’s gas supply, up from 20% last year.
The International Energy Agency warned in December that the EU could face a potential gas supply-demand gap of 27 billion cubic centimeters by 2023 in a scenario in which the EU’s pipeline gas supply Russia drops to zero and China’s LNG imports rebound to 2021 levels.
The IEA says improvements in energy efficiency and faster growth of renewables will help fill the gap. These changes will be necessary “to meet the conditions for filling gas storage levels to 95% and maintaining gas supply security through spring 2024 without undue stress on the market.” and European consumers”.