IEA predicts even tighter LNG market in 2023
By Innocent Obasi
The global liquefied natural gas (LNG) markets may become even tighter by next year when compared to already tight LNG markets in 2022, Fatih Birol, executive director of the International Energy Agency (IEA), said on Thursday.
In recent months, LNG imports into Europe have increased significantly as a result of efforts to reduce its reliance on Russian pipeline gas.
Following Moscow’s reduction in supplies to Europe in June, the European Union for the first time ever imported more LNG from the United States than gas via pipeline from Russia.
Birol said at the LNG Producer-Consumer Conference in Japan that this year’s imports of LNG into Europe have increased “by a staggering 60 percent“, according to a Reuters report.
A German Daily (Tagesspiegel) article on Wednesday said that Germany’s security authorities assumed that the Nord Stream 1 and 2 pipelines may be permanently offline following what many believed to have been sabotage on the pipes earlier in the week.
The EU and the United Kingdom in April recorded a high level of LNG imports as higher spot prices compared to Asia drew suppliers with flexible shipping to Europe, according to Energy Information Administration (EIA). Those suppliers were mostly from the United States.
“Last year, Russian gas accounted for 40 percent of our gas imports,” Ursula von der Leyen, president of European Commission, said at the 2022 State of the Union. “Today it’s down to 9 percent pipeline gas. But Europeans are also coping courageously with this.”
Analysts at consultant Energy Aspects, a leading energy and macro research consultancy, said that reduced energy supply due to the sanctions against Russia and Moscow shutting down key pipeline gas export routes will leave Europe scrambling for oil and gas well after the coming winter as the current crisis is not “a one winter story”.
“This is not a one winter story, let’s just make it very, very clear, and even before the crisis,” Amrita Sen, founder and director of research at Energy Aspects, said in a recent Bloomberg interview. “You know fundamentally we have been talking about high energy prices.”
A study by Rystad Energy, an independent research and business intelligence company, shows that Europe’s need for LNG from 2021 to 2040 is expected to rise by 150 percent without Russian pipeline gas, as the overall natural gas demand declines more slowly than domestic production and non-Russian pipeline imports. Through 2030, it is estimated that LNG will meet about 50 percent of Europe’s demand for natural gas. After 2030, LNG will supply an estimated 75 percent of demand by 2040.
The study further added that the increase in LNG consumption in Europe will be more than twice the 50 bcm (business continuity management), which is equivalent to 4.8 bcf/d (billion cubic feet per day) specified in the joint agreement reached in March by the Joe Biden administration and the EU. Although US LNG exports to Europe are currently at record levels, much more will be needed to completely rebalance European gas markets.