Europe Sees Spike in LNG Imports

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--There has been a spike in liquefied natural gas (LNG) cargoes being diverted to Europe in recent weeks following the halting of Russian gas supplies to Europe via Ukraine.

More than 10 LNG carriers leaving the U.S. have been diverted from their original charters to Asia in order to take advantage of premium prices in the European Union (EU) according to commodities data firm ICIS. It is also predicted that Europe could need an extra 100 LNG cargoes this summer to offset the loss of Russian gas via Ukraine. Russia stopped gas supplies through Ukraine at the start of January, at a time when Europe's gas storage supplies have been falling faster than normal due to a cold winter. The EU's gas storage sites are currently 59% full, according to the latest data from Gas Infrastructure Europe. This compares to storage levels of 75% full at this time last year.

ICIS stated: "Data has so far recorded five U.S. LNG cargoes switching direction towards European markets, and one to Turkey, while on the water in the past two weeks, with several more deals meaning more are expected to come. Others may have made the decision to switch to Europe at the point of loading and not show a change in direction while on the water. A source said in the first week of January that seven diversions were already taking place or planned, including from Singapore and Japan-based traders."

Alex Froley, LNG market analyst at ICIS, told the Financial Times. "Some ships have made some quite dramatic reversals in their direction. It's unusual to see so many course changes, and so many obvious about-turns." There has been a marked increase in both LNG investment and imports in Europe since the Russia/Ukraine war began three years ago. Industrial Info is tracking more than 150 LNG-related projects in the region worth almost US$13 billion in investment. Italy and Germany are the leading markets, accounting for well over half of that total investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.

Data from Gas Infrastructure Europe, the association of the gas infrastructure operators of Europe, shows that Europe may have to spend up to US$6 billion more on at least 100 additional gas cargoes this summer to help offset the impact of the Russian stoppage and colder weather, Reuters reported. The European Commission maintained at the start of the year: "There were no gas supply concerns in the New Year. 31 December 2024 marked the end of the Russian gas transit agreement via Ukraine. Thanks to efficient preparatory work and coordination in the region and beyond, there are no security of supply concerns. Gas supplies have been secured via alternative routes (Germany, Italy) and through withdrawals from storage. The European gas infrastructure is flexible to accommodate gas of non-Russian origin, aligning with the REPowerEU objectives. It has also been reinforced with significant new LNG import capacities since 2022. Storage levels at 72% are slightly higher than the average (69%) for this time of the year." However, that figure now looks set to dip under 60% just four weeks on.

Despite the extra pressure on Europe's gas stocks, the cutting off of the Ukraine gas pipeline with Russia has been hailed as a victory by many European nations. Ukraine's President Volodymyr Zelenskyy said it was one of "one of Moscow's biggest defeats. When [Vladimir] Putin was given power in Russia more than 25 years ago, the annual gas pumping through Ukraine to Europe was 130+ billion cubic metres (Bcm). Today, the transit of Russian gas is 0." The Guardian newspaper reported that Poland's foreign minister, Radosław Sikorski, called the development "a new victory" for Europe. It added that a report published last month by the Center for European Policy Analysis (Cepa) claimed: "Russia has abused Ukraine and Europe's dependence on gas supplies and transit revenues to extort political concessions, spread corruption and exert malign influence." Three years since Russia's invasion of Ukraine, the share of Russian gas in Europe has plummeted from 35% to 8%.

In recent weeks, Industrial Info has reported that 10 EU nations have called for sanctions on Russian pipeline gas and LNG in addition to the sanctions in place on Russian oil and other exports. For additional information, see January 22, 2025, article--EU Nations Demand Sanctions on Russian Gas & LNG.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).