Europe to Boost LNG Capacity with Eight Terminals

---

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union (EU) is set to boost its liquefied natural gas (LNG) import capacity by almost a third over the coming year as it continues to eliminate Russian-sourced oil and gas from its energy mix.

Maros Sefcovic, vice president of the European Commission (EC), tweeted that the EU was preparing to add eight more LNG regasification terminals, which would bring the region's total to 35. He stated that the new terminals will boost Europe's regasification capacity from 178 to 227 billion cubic meters (bcm) per year. The strategy is designed to help offset major gas shortages and rocketing energy prices experienced in Europe over the past year due to Russia's throttling of supplies to Europe. Europe relies on gas imports for 90% of its needs. Before Russia's invasion of Ukraine in February last year, Europe relied on Russia for around 45% of those gas imports, alongside 25% of its oil imports and 45% of coal imports. A ban on Russian coal came in force last August, while another on oil imports was enforced last month.

Last May, the EC proposed ground-breaking funding of up to 300 billion euro (US$321 billion) to cut Russia out of Europe's energy mix over the next five years. The REPowerEU plan will see most of the money going to accelerating the switch to renewables, the expansion and strengthening of the region's gas pipelines, suppliers and LNG infrastructure and the creation of a hydrogen infrastructure by 2030. For additional information, see May 19, 2022, article - Europe Proposes $220 Billion Boost To End Reliance on Russian Energy.

Industrial Info is tracking 77 new and expanded LNG regasification projects in Europe with an investment value of almost US$11 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.

Despite pipeline gas flows being largely cut off by Russia, the EU saw a rise in Russian LNG imports from 16 bcm in 2021 to 22 bcm last year and has called on companies not to renew contracts. European Commissioner for Energy, Kadri Simson, said: "We received around 20 bcm of Russian LNG last year. I think that we can and should get rid of Russian gas completely as soon as possible, still keeping in mind our security of supply. I encourage all Member States and all companies to stop buying Russian LNG and not to sign any new contracts with Russia once the existing contracts have expired. Committing not to renew existing contracts with Russia is the best way to give a long-term assurance to our reliable partners that meaningful demand will stay."

Reiterating that Russia has used gas as a weapon against Europe, Simson went on to highlight some successes in Europe's efforts over the past year to deal with the energy crisis. "Since September 2022, Russian gas is about 8% of all pipeline gas imported in the EU. Pipeline gas imports from Russia amounted to 61 bcm last year. The first gas supplier to Europe is no longer Russia...it is Norway. Some doubted that Europe would ever be able to receive the LNG it needed to replace Russian gas, due to limitations in the physical capacity of LNG terminals. But facts tell a different story. In less than one year, three new terminals were opened, and five more will open by the end of the year--for a total capacity of 50 bcm. In 2022 we received a total of 135 bcm of LNG from the global market. From the U.S., for instance, we received 56.4 bcm. This is 34 billion cubic meters more than in previous years. Overall, the EU phased out Russian gas by two-thirds. We backed up this diversification effort with new tools--introducing a common storage policy in just three months. This has worked well. We filled storage up to 95% by November last year. And today, we still have around 57% in our inventories. This is more than twice the level of underground storage last year."

Europe is braced for another couple of very tough years though as the region transitions. In January, the International Energy Agency (IEA) warned that Russian gas supplies may have further to fall and "are likely to be considerably lower in 2023 and could drop to zero, leaving an even larger hole in European and global gas supply." In addition, supplies of LNG will be tight. If pipeline imports to the EU from Russia drop to zero in 2023 and Chinese LNG demand rebounds to 2021 levels, then the EU "faces a serious supply-demand gap opening up in 2023." For additional information, see January 5, 2023, article - Europe Faces Tougher Gas Crisis in 2023.

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).