In a significant geopolitical shift, the European Union’s decision to cease purchasing Russian energy supplies has sparked a contentious debate on the sustainability and ramifications of such a move. Russian President Vladimir Putin has vocally criticized this decision, labeling it as “absolutely political” and prognosticating negative repercussions for the European bloc. This analysis delves into the intricate dynamics of the EU’s energy consumption, the pivotal role of the United States as an alternative supplier, and the broader geopolitical and economic consequences of this strategic pivot.
According to research informed by data from the UN platform Comtrade and the International Energy Agency, the European Union’s gas consumption in 2023 stood at 330 billion cubic meters, marking a 20% reduction from the previous year. This decline underscores the EU’s concerted effort to diversify its energy sources and reduce dependency on Russian gas amidst escalating geopolitical tensions.
The United States has emerged as a significant player in this new energy landscape, supplying 34.5 billion cubic meters of liquefied natural gas (LNG) to Europe in 2023. This accounts for 10.4% of the total gas consumption in the EU, with certain countries exhibiting a pronounced reliance on American gas. Notably, Finland, which did not import US gas in 2021, sourced a staggering 38.2% of its gas from the United States in 2023. Lithuania topped the list with 40% of its gas imports coming from the US, a sharp increase from 22.3% in 2021.
The diversification trend is evident across several other European nations, including Croatia, the Netherlands, France, Spain, Poland, Italy, and Germany, all of which increased their intake of US gas in 2023. Croatia, in particular, has become heavily dependent on US gas, accounting for 32% of its total gas consumption.
Conversely, a few countries like Greece, Malta, and Portugal have reduced their imports of American gas. This varied landscape highlights the complex and evolving nature of Europe’s energy supply chain and the strategic recalibrations necessitated by geopolitical shifts.
The financial toll of this transition is substantial. A review of Eurostat data indicated that European countries incurred an additional €185 billion ($201 billion) in natural gas expenses over 20 months due to the cessation of inexpensive Russian pipeline gas. This financial strain is a testament to the high costs associated with rapidly altering energy supply chains and the broader economic implications of geopolitical decisions.
President Putin’s warning underscores the potential long-term impacts of the EU’s decision on the European industrial sector. The shift away from Russian energy, he argues, could lead to Europe becoming the region with the highest energy costs globally, which may severely, and possibly irreversibly, impair the competitiveness of European industries against global counterparts.
Where does the EU’s gas come from?
Amid Russia’s unjustified and unprovoked invasion of Ukraine and the subsequent weaponization of energy resources, the European Union (EU) finds itself compelled to diversify its energy supplies. This imperative stems from the need to reduce dependency on Russian fossil fuels, necessitating significant investments in infrastructure such as new pipelines and liquefied natural gas (LNG) terminals. The EU and its member states have swiftly embarked on this journey despite the considerable costs involved.
Reducing Dependence on Russian Gas
The statistics paint a clear picture of the EU’s efforts to move away from reliance on Russian gas. In 2021, Russia’s pipeline gas constituted over 40% of EU imports, a figure that plummeted to about 8% by 2023. When combining pipeline gas and LNG imports, Russia’s overall share in EU gas imports dropped to less than 15%.
This dramatic decline in Russian gas imports was made possible primarily through two key mechanisms: a substantial increase in LNG imports and an overall reduction in gas consumption within the EU. The import data reveals a noteworthy shift in the EU’s gas supply dynamics:
- Import from Russia: Decreased from over 150 billion cubic meters (bcm) in 2021 to less than 43 bcm in 2023.
- Import from the United States: Expanded significantly from 18.9 bcm in 2021 to 56.2 bcm in 2023.
- Import from Norway: Showed a modest increase from 79.5 bcm in 2021 to 87.7 bcm in 2023.
- Import from other partners: Rose from 41.6 bcm in 2021 to 62 bcm in 2023.
These figures, sourced from the European Commission’s data based on ENTSO-G and Refinitiv, underline the tangible progress made by the EU in diversifying its gas sources and reducing reliance on Russian imports.
Source: European Commission based on ENTSO-G and Refinitiv
Investments in Infrastructure and Future Outlook
The EU’s strategy of diversifying energy supplies involves substantial investments in infrastructure. This includes the development of new pipelines and LNG terminals, aimed at facilitating the import of gas from reliable partners outside of Russia. While these investments are undoubtedly costly and time-consuming, they are seen as essential steps in enhancing energy security and resilience within the EU.
Looking ahead, the EU’s focus on diversification is expected to continue, with ongoing efforts to expand partnerships with alternative gas suppliers and further bolster LNG import capacities. This strategic shift not only mitigates geopolitical risks associated with over-reliance on Russian gas but also aligns with broader sustainability goals, including reducing carbon emissions and transitioning towards cleaner energy sources.
Top Gas Suppliers to the EU in 2023
In the landscape of gas supply to the European Union (EU) during 2023, Norway and the United States emerged as the top suppliers, significantly diversifying the EU’s gas import portfolio. Norway, in particular, played a pivotal role by providing nearly 30% of all gas imports, showcasing its substantial contribution to the EU’s energy security.
Market Share and Values of Gas Suppliers
A detailed breakdown of market shares and values of gas suppliers to the EU in 2023 provides a comprehensive view of the evolving gas import dynamics:
- Norway: Held the largest market share at 30.3%, supplying 87.8 billion cubic meters (bcm) of gas.
- United States: Followed closely with a market share of 19.4%, providing 56.2 bcm of gas.
- North Africa: Contributed significantly with a market share of 14.1%, supplying 41 bcm of gas.
- Russia (Pipeline): Despite a reduced share, still maintained a presence with 8.7% market share and 25.1 bcm of gas supplied.
- Russia (LNG): Added to the gas supply mix with a 6.1% market share, providing 17.8 bcm of gas.
- United Kingdom: Accounted for a 5.7% market share, supplying 16.6 bcm of gas.
- Qatar: Contributed with a 5.3% market share, providing 15.5 bcm of gas.
- Others: Combined for a market share of 10.3%, supplying 29.9 bcm of gas.
Market Share Visualization
A treemap visualization can effectively illustrate the market shares and values of gas suppliers to the EU in 2023, showcasing the relative contributions of each supplier in terms of volume and market share.
Strategic Implications and Future Trends
The dominance of Norway and the United States as top gas suppliers underscores the EU’s successful efforts in diversifying its energy sources, reducing dependency on a single supplier, and enhancing energy security. This strategic shift aligns with broader geopolitical and sustainability goals, promoting resilience and stability in the EU’s energy sector.
Looking ahead, continued collaboration with diverse gas suppliers and investments in LNG infrastructure are expected to further strengthen the EU’s energy resilience and contribute to a more sustainable and secure energy future.
| Gas Supplier | Market Share (%) | Gas Supplied (bcm) |
|---|---|---|
| Norway | 30.3% | 87.8 |
| United States | 19.4% | 56.2 |
| North Africa | 14.1% | 41.0 |
| Russia (Pipeline) | 8.7% | 25.1 |
| Russia (LNG) | 6.1% | 17.8 |
| United Kingdom | 5.7% | 16.6 |
| Qatar | 5.3% | 15.5 |
| Others | 10.3% | 29.9 |
The Evolution of LNG Infrastructure in Europe: A Strategic Shift in Energy Dependence
Nearly two years following Russia’s full-scale invasion of Ukraine, Europe is strategically pivoting towards energy independence, notably through augmenting its Liquefied Natural Gas (LNG) imports from non-Russian sources. The European Union (EU) is on a steadfast path to eradicate its reliance on Russian fossil fuels by 2027, concurrently aiming for a significant shift towards renewable energy, with binding targets set at 42.5% by 2030 and aspirations reaching 45%.
In 2023, Europe’s LNG importation amounted to approximately 167 billion cubic metres (bcm), maintaining the previous year’s level. Notably, the United States emerged as the predominant supplier, contributing 46% to Europe’s LNG imports, followed by Qatar (12.1%), Russia (11.7%), Algeria (9.4%), and Nigeria (5.6%). The primary importers within Europe included France, Spain, the Netherlands, the UK, Italy, and Türkiye. The EU27’s expenditure on LNG imports was nearly €61 billion in 2023, with a notable €26.8 billion spent on U.S. LNG imports.
The expansion of Europe’s LNG infrastructure is a testament to its commitment to diversifying energy sources and enhancing security. The region boasts 37 operational import terminals, with eight new ones commencing operations and four undergoing expansion in 2022 and 2023. Plans are underway for 13 additional projects, alongside expansions of four existing terminals, aiming to augment Europe’s LNG capacity by 94 bcm to a total of 405 bcm by 2030.
| Name of Installation | Country | Capacity (bcm) | Starting Date |
|---|---|---|---|
| Zeebrugge | Belgium | 9.00 | 2021* |
| Krk | Croatia | 2.60 | 2021* |
| Dunkerque | France | 13.00 | 2021* |
| Fos Cavaou | France | 8.50 | 2021* |
| Fos Tonkin | France | 1.50 | 2021* |
| Montoir-de-Bretagne | France | 10.00 | 2021* |
| Revithoussa | Greece | 7.00 | 2021* |
| OLT Offshore LNG Toscana FSRU | Italy | 3.55 | 2021* |
| Panigaglia | Italy | 3.40 | 2021* |
| Rovigo (Adriatic LNG) | Italy | 8.00 | 2021* |
| FSRU Independence | Lithuania | 4.00 | 2021* |
| Delimara FSRU | Malta | 0.70 | 2021* |
| Gate terminal | Netherlands | 12.00 | 2021* |
| Swinoujscie | Poland | 6.20 | 2021* |
| Sines | Portugal | 7.60 | 2021* |
| Barcelona | Spain | 17.10 | 2021* |
| Bilbao | Spain | 7.00 | 2021* |
| Cartagena | Spain | 11.80 | 2021* |
| El Musel | Spain | 8.00 | 2021* |
| Huelva | Spain | 11.80 | 2021* |
| Mugardos | Spain | 3.60 | 2021* |
| Sagunto | Spain | 8.80 | 2021* |
| Aliaga Etki | Türkiye | 7.30 | 2021* |
| Aliaga Izmir | Türkiye | 13.80 | 2021* |
| FSRU Dortyol (Ertugrul Gazi) | Türkiye | 9.70 | 2021* |
| Marmara Ereglisi | Türkiye | 12.80 | 2021* |
| Isle of Grain | UK | 19.50 | 2021* |
| Milford Haven – Dragon | UK | 7.60 | 2021* |
| Zeebrugge (expansion) | Belgium | 6.60 | 2024 |
| Zeebrugge (expansion) | Belgium | 1.80 | 2026 |
| Krk (expansion) | Croatia | 0.30 | 2022 |
| Krk (expansion) | Croatia | 3.20 | 2025 |
| Vasiliko | Cyprus | 2.40 | 2024 |
| Paldiski | Estonia | 2.50 | 2025 |
| Tallinn LNG | Estonia | 4.00 | 2025 |
| Inkoo FSRU | Finland | 5.00 | 2023 |
| Fos Cavaou (expansion) | France | 1.50 | 2022 |
| Fos Cavaou (expansion) | France | 2.00 | 2030 |
| Le Havre | France | 5.00 | 2023 |
| Brunsbüttel | Germany | 5.00 | 2023 |
| Ostsee FSRU1 Lubmin | Germany | 5.00 | 2023 |
| Ostsee FSRU1 (moves to Mukran in 2024) | Germany | 5.00 | 2024 |
| Ostsee FSRU2 Mukran | Germany | 4.00 | 2024 |
| Ostsee FSRU2 Mukran (expansion) | Germany | 4.50 | 2025 |
| Stade | Germany | 12.00 | 2024 |
| Wilhelmshaven (UNIPER) | Germany | 6.00 | 2022 |
| Wilhelmshaven (TES) | Germany | 2.20 | 2024 |
| Alexandroupolis (Gastrade) | Greece | 5.50 | 2024 |
| Argo FSRU | Greece | 5.20 | 2025 |
| Thrace LNG | Greece | 5.50 | 2024 |
| Mag Mell FSRU | Ireland | 2.60 | 2024 |
| Porto Empedocle | Italy | 8.00 | 2026 |
| SNAM FSRU-1 Piombino | Italy | 5.00 | 2023 |
| SNAM FSRU-2 Ravenna | Italy | 5.00 | 2024 |
| Adriatic LNG (expansion) | Italy | 1.00 | 2022 |
| Gate terminal (expansion) | Netherlands | 4.00 | 2022 |
| Gate terminal (expansion) | Netherlands | 4.00 | 2026 |
| EemsEnergy | Netherlands | 8.00 | 2022 |
| Gdansk LNG | Poland | 6.10 | 2028 |
| Swinoujscie (expansion) | Poland | 2.10 | 2024 |
| FSRU Gulf of Saros | Türkiye | 7.70 | 2023 |
| Isle of Grain (expansion) | UK | 5.00 | 2025 |
| Skulte FSRU | Latvia | 4.10 | 2023 (Stalled) |
| Gdansk FSRU 2 | Poland | 4.50 | 2023 (Stalled) |
| Shannon FSRU | Ireland | 7.80 | 2023 (Stalled) |
| Vlora FSRU | Albania | 5.00 | 2023 (Stalled) |
| Dioriga Gas FSRU | Greece | 2.50 | 2023 (Stalled) |
| Milford Haven – South Hook | UK | 21.00 | 2021* |
Image: LNG regasification terminals in Europe
Europe’s existing and planned LNG regasification capacity – Billion cubic metres (bcm)
Source: Gas Infrastructure Europe, IEEFA • Includes EU27, UK, Türkiye.
Germany is leading this infrastructural enhancement, with plans to deploy three more Floating Storage and Regasification Units (FSRUs) in 2024. Similar developments are expected in Greece and Italy. However, strategic moves by Poland and Lithuania may temper the long-term demand outlook.
However, the surge in LNG capacity might outpace actual demand. The EU’s annual import capacity is anticipated to reach 406 bcm by 2030, juxtaposed against a projected fall in total gas demand to around 400 bcm. This scenario raises critical questions regarding the necessity of further LNG infrastructure expansion, given the declining gas consumption across Europe and the achievement of winter gas storage targets ahead of schedule.
Moreover, the U.S. Energy Information Administration (EIA) projects a one-third expansion in Europe’s LNG import capacity by the end of 2024. This development underscores Europe’s decisive shift in its energy landscape, emphasizing LNG’s increasing role in ensuring energy security away from Russian gas reliance.
Growing LNG Imports in the EU: A Strategic Shift in 2023
In 2023, the European Union (EU) experienced a significant transformation in its energy import strategy, particularly in the liquefied natural gas (LNG) sector. The year marked a notable increase in LNG imports, reaching approximately 167 billion cubic meters (bcm), a figure consistent with the previous year’s levels. This change reflects the EU’s ongoing efforts to diversify its energy sources and reduce dependency on Russian gas supplies, especially in the wake of geopolitical tensions.
The United States emerged as the leading supplier of LNG to the EU, contributing nearly 50% of the total imports. This surge signifies a near tripling of LNG imports from the US compared to 2021, highlighting a strategic pivot towards securing energy from more stable and reliable partners. Other significant contributors included Qatar (12.1%), Russia (11.7%), Algeria (9.4%), and Nigeria (5.6%), showcasing the EU’s broadened energy supply landscape.
France, Spain, the Netherlands, the United Kingdom, Italy, and Türkiye were the primary importers of LNG in the EU, reflecting their strategic roles in the bloc’s energy infrastructure. The import dynamics underscore the critical importance of these nations in facilitating energy distribution and security across Europe.
In terms of financial expenditure, the EU allocated almost €61 billion for LNG imports in 2023, with the US, Russia, and Qatar being the top beneficiaries. This expenditure was part of the EU’s broader strategy to enhance its energy security and supply resilience in the face of fluctuating global energy markets.
The EU’s LNG import capacity expansion, with 53.5 bcm of new regasification capacity added since Russia’s invasion of Ukraine, is a testament to its commitment to securing a reliable energy future. However, the actual demand for LNG in the EU is projected not to exceed 135 bcm by 2030, potentially leaving a substantial portion of this new capacity underutilized.
Image: Europe has installed 53.5 bcm new LNG import capacity since February 2022
- Adriatic LNG, Rovigo, Italy
- Gate terminal, The Netherlands
- Fos Cavaou, France
- Krk (FSRU LNG Croatia), Croatia
- EemsEnergy (FSRU Eemshaven), The Netherlands
- Wilhelmshaven (FSRU Hoegh Esperanza), Germany
- Inkoo (FSRU Exemplar), Finland
- Gulf of Saros (FSRU Swan Energy), Türkiye
- Brunsbüttel (FSRU Hoegh Gannet), Germany
- Ostsee/Lubmin (FSRU Neptune)
- Piombino (FSRU Golar Tundra), Italy
- El Musel, Spain
- Le Havre (FSRU Cape Ann), France
Analyzing Europe’s LNG Import Terminal Utilization: Trends and Challenges
The utilization rates of the European Union’s (EU) LNG import terminals in 2023 reveal crucial insights into the region’s LNG infrastructure dynamics. Understanding these trends and challenges is pivotal in optimizing LNG operations and addressing potential capacity gaps.
Utilization Trends and Performance
In 2023, the average utilization rate of the EU’s LNG import terminals stood at 58.5%, reflecting a decrease from 63% recorded in 2022. This decline underscores shifting market dynamics and operational factors influencing terminal performance.
Underperforming Terminals: Insights and Analysis
Notably, eight LNG terminals experienced utilization rates below 50% in the previous year, signaling operational challenges and market nuances impacting terminal efficiency. These terminals include:
- Four in Spain: Barcelona, Cartagena, Huelva, and Sagunto
- One in Italy: Piombino FSRU (Snam), which commenced operations in July and achieved an 80% utilization rate in November and December, indicating seasonal demand fluctuations and operational ramp-up.
- One in Greece: Revithoussa
- One in Finland: Inkoo
- One in Germany: Ostsee FSRU1
The varied performance of these terminals underscores the influence of regional demand dynamics, supply chain fluctuations, regulatory frameworks, and infrastructure capacities on utilization rates.
Image: LNG REGASIFICATION BY COUNTRY/TERMINAL
Key Factors Influencing Utilization Rates
Several factors contribute to the fluctuating utilization rates of LNG import terminals:
- Demand Variability: Seasonal fluctuations and market demand dynamics impact terminal utilization, with peak periods driving higher rates.
- Supply Chain Dynamics: LNG supply availability, shipping schedules, and contractual arrangements influence terminal utilization patterns.
- Infrastructure Capacity: Terminal capacities and operational efficiencies play a crucial role in determining utilization rates.
- Regulatory Environment: Regulatory frameworks, including market liberalization policies and energy transition initiatives, shape LNG market dynamics and terminal utilization.
Implications for LNG Market Strategy
Understanding and addressing underperforming terminals is critical for optimizing LNG market strategies and ensuring efficient resource allocation. Strategies to enhance terminal utilization may include:
- Market Diversification: Targeting emerging markets and strategic partnerships to expand LNG demand and utilization.
- Operational Optimization: Implementing advanced technologies, operational best practices, and maintenance strategies to improve terminal efficiencies.
- Regulatory Alignment: Aligning regulatory frameworks with market needs to facilitate investment, innovation, and market competitiveness.
- Demand Forecasting: Leveraging data analytics and predictive modeling to anticipate demand trends and optimize terminal utilization.
Europe’s LNG Dilemma: Forecasted Demand vs. Regasification Capacity
In recent years, Europe has witnessed a significant shift in its energy landscape, particularly concerning liquefied natural gas (LNG) demand, regasification capacity, and overall gas consumption trends. Analyzing data from 2021 to 2023 provides valuable insights into this evolving scenario.
Rising LNG Imports and Decreasing Gas Consumption
In 2023, LNG imports accounted for a substantial 37% of Europe’s gas consumption, marking a notable increase from 34% in 2022 and a significant surge from 19% in 2021. This surge reflects Europe’s strategic pivot towards LNG as a key component of its energy mix.
However, despite the uptick in LNG imports, Europe’s overall gas consumption in 2023 hit its lowest level in a decade, standing at 452 billion cubic meters (bcm). This figure represents a 19% drop from 2021, indicating a notable downward trend in gas consumption across the region.
IMAGE: Europe’s LNG imports, 2023 – Billion cubic metres (bcm)
Source: Kpler, IEEFA • Kpler’s data on Yamal LNG imports into Belgium could include transshipment volumes sent to other markets. IEEFA analysis tries to separate import volumes from transshipment volumes based on the latest available data.
IMAGE: Europe’s LNG imports, 2022 – Billion cubic metres (bcm)
Source: Kpler, IEEFA • Kpler’s data on Yamal LNG imports into Belgium could include transshipment volumes sent to other markets. IEEFA analysis tries to separate import volumes from transshipment volumes based on the latest available data.
IMAGE: Europe’s LNG imports, 2021 – Billion cubic metres (bcm)
Source: Kpler, IEEFA • Kpler’s data on Yamal LNG imports into Belgium could include transshipment volumes sent to other markets. IEEFA analysis tries to separate import volumes from transshipment volumes based on the latest available data.
Countries with the Most Significant Reductions in Gas Consumption
Several European countries have witnessed substantial decreases in gas consumption over the past two years, highlighting shifting energy dynamics and policy priorities. Among these countries, notable reductions include:
- Germany: Reduced consumption by 17.6 bcm
- Italy: Decreased consumption by 14.4 bcm
- The UK: Witnessed a decline of 14.2 bcm
- The Netherlands: Experienced a drop of 10.9 bcm
- Türkiye: Registered a decrease of 9.7 bcm
- France: Saw a reduction of 8.6 bcm
- Spain: Recorded a decrease of 4.8 bcm
These reductions reflect diverse factors such as energy efficiency measures, renewable energy integration, and economic considerations influencing energy usage patterns.
Discrepancy Between Forecasted LNG Demand and Regasification Capacity
One of the key challenges facing Europe’s energy sector is the notable disconnect between forecasted LNG demand and the capacity to regasify LNG. Despite the rising demand for LNG, there exists a looming gap between projected demand and available regasification infrastructure.
IEEFA’s forecasts indicate that European LNG demand is unlikely to exceed 135 bcm by 2030. However, the current trajectory suggests a potential gap of approximately 265-270 bcm of unused regasification capacity by the same year. This disparity underscores the need for strategic planning and investment alignment to optimize LNG utilization and infrastructure development.
Implications and Future Outlook
The divergence between forecasted LNG demand and regasification capacity poses several implications for Europe’s energy security, market dynamics, and investment strategies. Addressing this challenge requires coordinated efforts among stakeholders to align infrastructure development with evolving energy demand patterns.
Looking ahead, Europe’s energy transition journey will continue to be shaped by factors such as geopolitical dynamics, climate commitments, technological advancements, and market fluctuations. Strategic foresight and adaptive policies will be essential in navigating the complexities of the LNG market and ensuring a resilient and sustainable energy future for the continent.
EU27 Spending on LNG: A Detailed Analysis
In 2022, the European Union (EU27) incurred substantial expenses for liquefied natural gas (LNG) imports, amounting to approximately €110.6 billion. This figure experienced a significant decline in 2023, with the EU27 spending nearly €61 billion on LNG imports. A substantial portion of this expenditure, around €26.8 billion, was allocated for LNG imports from the United States, highlighting the increasing role of the U.S. as a key supplier. Other notable suppliers included Russia, Qatar, Algeria, Norway, and Nigeria, contributing €8.1 billion, €7.7 billion, €6.1 billion, €2.9 billion, and €2.8 billion, respectively, to the total LNG import bill.
Over the period from January 2022 to December 2023, the total spending by EU27 on LNG imports reached approximately €171.5 billion. The U.S. emerged as the largest supplier, with the EU27 spending around €75.1 billion on American LNG. Russia and Qatar were also significant contributors, each accounting for around €23.8 billion of the expenditure. Other suppliers such as Algeria, Nigeria, Norway, and Angola had respective spending figures of €10.8 billion, €7.3 billion, €6.5 billion, and €6.5 billion, illustrating the diversified nature of the EU’s LNG import market.
Image : EU27 spending on LNG imports from the U.S., 2022-2023 Billion €
Source: Eurostat
Table for EU27 spending on LNG imports by exporter country in 2022 versus 2023, measured in Billion €:
| Exporter Country | 2022 | 2023 | Total |
|---|---|---|---|
| U.S. | 48.34 | 26.81 | 75.15 |
| Russia | 15.75 | 8.09 | 23.84 |
| Qatar | 16.06 | 7.74 | 23.8 |
| Algeria | 4.78 | 6.07 | 10.85 |
| Nigeria | 4.52 | 2.79 | 7.31 |
| Norway | 3.61 | 2.93 | 6.54 |
| Angola | 4.84 | 1.63 | 6.47 |
| Egypt | 4.82 | 0.78 | 5.6 |
| Trinidad & Tobago | 3.08 | 1.15 | 4.23 |
| Cameroon | 1.24 | 0.7 | 1.94 |
| Equatorial Guinea | 1.03 | 0.87 | 1.89 |
| Oman | 0.76 | 0.63 | 1.4 |
| Peru | 0.15 | 0.28 | 0.43 |
| Mozambique | 0.16 | 0.23 | 0.39 |
| Spain | 0.33 | – | 0.33 |
| Netherlands | 0.17 | 0.09 | 0.27 |
| Australia | 0.19 | 0 | 0.19 |
| United Arab Emirates | 0.171 | – | 0.17 |
| Belgium | 0.12 | 0.04 | 0.16 |
| Dominican Republic | 0.15 | – | 0.15 |
| Indonesia | 0.11 | 0.03 | 0.14 |
| Finland | 0.02 | 0.08 | 0.1 |
| China | 0.07 | – | 0.07 |
| France | 0.05 | 0.01 | 0.06 |
| South Korea | 0.03 | 0 | 0.03 |
| Lithuania | 0.01 | 0.01 | 0.02 |
| Jamaica | 0.01 | – | 0.01 |
| Croatia | 0 | 0 | 0.01 |
The geopolitical landscape, particularly Russia’s invasion of Ukraine, significantly influenced the EU’s LNG market dynamics. Europe augmented its LNG regasification capacity by 53.5 billion cubic meters (bcm) in response to the crisis, signaling a strategic shift towards ensuring energy security and reducing dependency on Russian energy supplies. The consumption of gas in Europe witnessed a downturn, reaching its lowest level in a decade in 2023, 20% below the 2021 figure. This reduction was most pronounced in countries like Germany, Italy, the UK, the Netherlands, Türkiye, France, and Spain.
In terms of LNG imports, 2023 saw Europe maintaining a steady pace with a total of approximately 167 bcm, consistent with the previous year’s figures. The U.S. was a major player, accounting for 46% of Europe’s LNG imports, followed by Qatar, Russia, Algeria, and Nigeria. France, Spain, the Netherlands, the UK, Italy, and Türkiye were the largest importers of LNG in Europe during this period.
The strategic shifts in the EU’s energy procurement landscape reflect a broader global trend of transitioning towards more sustainable and reliable energy sources. With the growing prominence of LNG as a cleaner and more flexible energy alternative, European countries are actively diversifying their energy sources and reducing reliance on traditional suppliers like Russia, especially in light of geopolitical tensions and the pursuit of energy independence.
The EU’s LNG expenditure pattern and import strategy underscore a significant transition in its energy landscape. With the U.S. becoming a dominant supplier and the overall import strategy diversifying, the EU is strategically positioning itself to mitigate geopolitical risks and secure a stable energy future. The data and trends from 2022 and 2023 provide a clear view of the evolving dynamics in the global LNG market and the EU’s adaptive strategies in this context.
Russia: LNG Infrastructure and Trade with Europe
Russia’s strategic positioning in the global LNG market is characterized by its extensive infrastructure and the evolving dynamics of its trade with Europe. The country boasts four LNG terminals: Yamal, Portovaya, Vysotsk in the Atlantic basin, and Sakhalin in the Pacific. The largest, Yamal, has a capacity of 17.44 million tons per annum (mtpa), contributing significantly to Russia’s LNG export capabilities.
Despite geopolitical tensions and sanctions, Russia has not deterred its ambitions to expand its LNG output. In November 2023, the U.S. imposed sanctions on the Russian Arctic LNG 2 project, a major initiative led by Novatek, Russia’s largest LNG producer, with significant participation from international stakeholders like France’s TotalEnergies. However, the project faces delays, with commercial LNG supplies expected no earlier than the second quarter of 2024. Arctic LNG 2 is pivotal for Russia, aiming to significantly enhance its LNG production capacity with three trains designed to produce 19.8 million metric tons per year and 1.6 million tons per year of stable gas condensate.
Image :Russian LNG imports to Europe, 2021-2023
Source: Kpler, IEEFA • Kpler’s data on Yamal LNG imports into Belgium could include transshipment volumes sent to other markets. IEEFA analysis tries to separate import volumes from transshipment volumes based on the latest available data. – Europe imported 19.5 bcm of Russian LNG in 2023, similar to 2022 values. – Spain, France and Belgium received 80% of Europe’s Russian LNG imports last year.
Russian LNG has seen a robust demand in Europe, with a notable increase in supplies between 2021 and 2023. Key European terminals such as Zeebrugge in Belgium, Montoir-de-Bretagne in France, and Bilbao in Spain have been major importers of Russian LNG. In fact, in 2022, Russia boosted its LNG exports to Europe by 20%, somewhat compensating for the decrease in pipeline gas exports due to political tensions over Ukraine. Novatek played a significant role in this increase, particularly through its Yamal project.
Image : LNG terminals in Russia
Source: Gas Infrastructure Europe, IEEFA • Last updated: October 2023
The geopolitical landscape has affected Russia’s LNG trade dynamics, with sanctions challenging the completion of projects like Arctic LNG 2. These sanctions have led to a force majeure declaration by Novatek, indicating the severe impact on Russia’s future LNG projects. Technical challenges and the departure of Western companies with crucial expertise, like the French engineering group Gaztransport & Technigaz, have added to the complexities. Moreover, the scarcity of ice-class tankers due to sanctions has posed significant logistical challenges for Russia’s Arctic LNG projects.
In light of these challenges, Russia remains determined to enhance its LNG production, aiming to secure 20% of the global LNG market by 2035. This ambition reflects Russia’s strategic shift towards LNG as a means to sustain its energy revenues, particularly in the face of dwindling pipeline gas exports to Europe and the broader implications of international sanctions.
Image : Monthly Russian LNG imports, 2021-2023
Source: Kpler, IEEFA • Kpler’s data on Yamal LNG imports into Belgium could include transshipment volumes sent to other markets. IEEFA analysis tries to separate import volumes from transshipment volumes based on the latest available data. – Including transshipments, Europe’s terminals received 24.72 bcm of LNG from Russia last year, 22.17 bcm of which was from Yamal, 1.56 bcm from Portovaya and 0.99 bcm from Vysotsk. Part of those flows were volumes of LNG imported by European countries and the rest were volumes of Yamal LNG transshipped at Zeebrugge and Montoir-de-Bretagne and sent to markets outside Europe. – Belgium’s Zeebrugge was the European terminal that received the most Yamal LNG last year (7.16 bcm), followed by Montoir-de-Bretagne with 4.97 bcm and Bilbao with 2.78 bcm. – Zeebrugge was the European terminal that imported the most LNG from Vysotsk in 2023, followed by Tornio Manga (Finland). – Greece’s Revithoussa was the European terminal that imported the most LNG from Portovaya in 2023, followed by Ereglisi and Dortyol (both in Türkiye).
The European Union, meanwhile, has been adapting to the changing energy landscape, with countries like Spain, France, and Belgium significantly reliant on Russian LNG. The EU has been working on reducing this dependency, evidenced by the diversified sourcing of LNG and the promotion of energy resilience.
Russia’s LNG sector is at a crossroads, balancing ambitious expansion plans against geopolitical and technical challenges. The country’s ability to navigate these hurdles will shape the future of its LNG trade with Europe and its position in the global energy market.
Image: Russian LNG flows by terminal, 2023 – Billion cubic metres (bcm)
Source: Kpler, IEEFA • The values for Zeebrugge and Montoir-de-Bretagne include LNG imports and transshipments.
Europe’s Energy Evolution: Transitioning from Russian Gas to US Alternatives
The European Union’s strategic shift from Russian gas to alternative sources, especially from the United States, represents a significant realignment in its energy policy and geopolitical stance. This transition is part of a broader effort to reduce dependency on Russian energy supplies, which has gained urgency following geopolitical tensions and security concerns.
The move towards energy diversification involves increasing LNG imports from the United States and other suppliers, which has both economic and industrial implications. Economically, the shift could affect gas prices, trade balances, and energy security. Industrially, it necessitates adjustments in infrastructure, such as the development of new LNG terminals and the expansion of existing ones, to accommodate increased LNG imports.
However, this transition is not without challenges. It involves navigating complex geopolitical relationships, securing reliable and sustainable energy sources, and managing the economic impacts of changing energy supply chains. Furthermore, the EU’s efforts to diversify its energy sources are part of a larger strategy to enhance energy security, reduce carbon emissions, and support the transition to a more sustainable and resilient energy system.
The EU’s pivot away from Russian gas towards other suppliers like the United States is also shaping global energy markets. It influences LNG trade flows, impacts global gas prices, and affects the strategies of major energy-exporting countries. The situation underscores the interconnected nature of global energy markets and the geopolitical significance of energy trade.
In summary, the EU’s move to reduce reliance on Russian gas and increase imports from the United States and other suppliers is a multifaceted strategy with far-reaching consequences. It reflects broader goals of energy security, diversification, and sustainability, and will continue to have significant implications for the global energy landscape and geopolitical dynamics in the years ahead.
reference link :
- https://www.consilium.europa.eu/en/infographics/eu-gas-supply/#:~:text=Why%20is%20gas%20so%20important,13%25%20less%20than%20in%202021.
- https://ieefa.org/european-lng-tracker
- https://www.iea.org/reports/how-to-avoid-gas-shortages-in-the-european-union-in-2023/baseline-european-union-gas-demand-and-supply-in-2023
- European Network of Transmission System Operators for Gas (ENTSOG) Reports
- European Commission Energy Market Data
- Industry Reports and Analyses
